Problem 1 Retained

Earnings 2019 Accounts Affecte

Nature of Error 2017 2018 2019 1/1/2019 Account

Omission of prepaid expenses

12/31/2017 29,000 -29,000
12/31/2018 30,000 -30,000 30,000 Expenses
12/31/2019 34,000 Prepaid exp
Expenses
Omission of unearned revenue
12/31/2017 -20,000 20,000
12/31/2018 -29,000 28,000 -28,000 Revenue
12/31/2019 -15,000 Revenue
Unearned revenue
Omission of accrued expenses
12/31/2017 -27,500 27,500
12/31/2018 -25,000 25,000 -25,000 Expenses
12/31/2019 -27,000 Expenses
Accrued exp
Omission of accrued revenue
12/31/2017 42,500 -42500
12/31/2018 45,000 -45,000 45,000 Revnues
12/31/2019 41,000 Accrued revenues
Revenues
Net under/overstatement 24,000 -2,000 11,000 22,000
Reported profit/loss -120,000 100,000 200,000
Corrected profit/loss -96,000 98,000 211,000

Problem 2

1. Retained earnings 160,000

Wages exp 160,000

2. Interest income 48,000

Retained earnings 48,000

3.Insurance Expense 18,000

Prepaid insurance 18,000
Retained earnings 36,000

4. Supplies Expense 25,000

Retained earnings 25,000

5. Retained earnings 80,000

Accumulated amortization- Dev Cost 80,000
 Capitalized development cost 120,000
Amortization exp- Dev Cost 40,000

6. Retained earnings 80,000

Service revenue 40,000
Unearned service revenue 40,000

7. Retained earnings 36,000

Rent revenue 36,000

8. Office Equipment 1,500,000

Depreciation expense- equipment 300,000
Accumulated Depreciation 900,000
Retained earnings 900,000
2019 Accounts Affected
Debit Credit

30,000
34,000
34,000

28,000
15,000
15,000

25,000
27,000
27,000

45,000
41,000
41,000