Expenses (O) NI (U) RE (U)

Prepaid Expenses
(29,000) 29,000 29,000
Income (O) NI (O) RE (O)
Unearned Revenues
(20,000) (20,000) (20,000)
2020
Expenses (U) NI (O) RE (O)
Accrued Expenses
27,500 (27,500) (27,500)
Income (U) NI (U) RE (U)
Accrued Revenues
42,500 42,500 42,500

Expenses (U) NI (O) RE (O)

29,000 (29,000) (29,000)
Prepaid Expenses
Expenses (O) NI (U) RE (U)
(30,000) 30,000 30,000
Income (U) NI (U) RE (U)
20,000 20,000 20,000
Unearned Revenues
Income (O) NI (O) RE (O)
(28,000) (28,000) (28,000)
2021
Expenses (O) NI (U) RE (U)
(27,500) 27,500 27,500
Accrued Expenses
Expenses (U) NI (O) RE (O)
25,000 (25,000) (25,000)
Income (O) NI (O) RE (O)
(42,500) (42,500) (42,500)
Accrued Revenues
Income (U) NI (U) RE (U)
45,000 45,000 45,000

Expenses (U) NI (O) Income 30,000

30,000 (30,000) Retained Earnings
Prepaid Expenses
Expenses (O) NI (U) Prepaid Expense 34,000
(34,000) 34,000 Expense
Income (U) NI (U) Retained Earnings 28,000
28,000 28,000 Income
Unearned Revenues
Income (O) NI (O) Income 15,000
(15,000) (15,000) Unearned Revenue
2022
Expenses (O) NI (U) Retained Earnings 25,000
(25,000) 25,000 Income
Accrued Expenses
Expenses (U) NI (O) Expense 27,000
27,000 (27,000) Accrued Expense
Income (O) NI (O) Income 45,000
(45,000) (45,000) Retained Earnings
Accrued Revenues
Income (U) NI (U) Accrued Revenue 41,000
41,000 41,000 Income
 Nature of Error Under (Over) RE 1/1/22
2020 2021 2022
Omitted Prepaid Expenses
2020 29,000 -29,000 0
2021 30,000 -30,000 30,000
2022 34,000 0
Omitted Unearned Revenues 0
2020 -20,000 20,000 0
2021 -28,000 28,000 -28,000
2022 -15,000 0
Omitted Accrued Expenses 0
2020 -27,500 27,500 0
2021 -25,000 25,000 -25,000
2022 -27,000 0
Omitted Accrued Revenues 0
2020 42,500 -42,500 0
2021 45,000 -45,000 45,000
2022 41,000 0
24,000 -2,000 11,000 22,000

30,000

34,000

28,000

15,000

25,000

27,000

45,000

41,000
1 2021 Expense (U) NI (O) RE (O) Retained Earnings
160,000 160,000 160,000 Wage Expense
2022 Expense (O) NI (U)
(160,000) 160,000

2 2020 Income (U) NI (U) RE (U) No Entry (Counter-Balanced)

48,000 48,000 48,000
2021 Income (O) NI (O) RE (O)
(48,000) (48,000) (48,000)

3 2021 Expense (O) NI (U) RE (U) Prepaid Expense

(40,000) 40,000 40,000 Insurance Expense
2022 Expense (U) NI (O) Retained Earnings
20,000 (20,000)

4 2021 Expense (O) NI (U) RE (U)

(25,000) 25,000 25,000
Expense (O) NI (U) RE (U)
(45,000) 45,000 45,000
2022 Expense (U) NI (O)
25,000 (25,000) Prepaid Supplies
Expense (U) NI (O) Retained Earnings
45,000 (45,000) Expenses
Expense (O) NI (U)
(28,000) 28,000
Expense (O) NI (U)
(52,000) 52,000

6 2021 Income (O) NI (O) RE (O) Retained Earnings

(80,000) (80,000) (80,000) Service Income
2022 Income (U) NI (U) Advances from Customer
40,000 40,000

7 2021 Income (O) NI (O) RE (O) Retained Earnings

(36,000) (36,000) (36,000) Rent Income
2022 Income (U) NI (U)
36,000 36,000

8 2020 Expense (O) NI (U) RE (U) Office Equipment

(1,200,000) 1,200,000 1,200,000 Retained Earnings
2021 Expense (U) NI (O) RE (O) Accumulated Depreciation
300,000 (300,000) (300,000) Retained Earnings
2022 Expense (U) NI (O) Accumulated Depreciation
300,000 (300,000) Depreciation Expense
Accumulated Depreciation
 160,000
160,000

20,000
20,000
40,000

80,000
70,000
10,000

80,000
40,000
40,000

36,000
36,000

1,500,000
1,200,000
300,000
300,000
300,000
300,000
300,000
1 2021 COGS xx 2021 EI (U) C/S (O)
Inventory xx xx (xx)
2022 BI (U) C/S (U)
xx xx

2 2022 COGS xx 2022 EI (U) C/S (O)

Inventory xx xx (xx)

3 2021 Purchase (U) NI (O)

xx (xx)
2022 Purchase (O) NI (U)
(xx) xx

4 2021 Purchase (U) NI (O)

xx (xx)
EI (U) C/S (O)
xx (xx)
2022 Purchase (O) NI (U)
(xx) xx
BI (U) CS (U)
xx xx

5
NI (U) RE (U) Beginning Inventory xx
xx xx Retained Earnings xx
NI (O)
(xx)

NI (U) Ending Inventory xx

xx Income Summary xx

RE (O) Retained Earnings xx

(xx) Purchase xx

RE (O) Retained Earnings xx

(xx) Purchase xx
NI (U) RE (U) Beginning Inventory xx
xx xx Retained Earnings xx

NI (O)
(xx)
a 2020 Expense (U) NI (O) RE (O)
80,000 -80,000 -80,000
2021 Expense (O) NI (U) RE (U)
-80,000 80,000 80,000
Expense (U) NI (O) RE (O)
60,000 -60,000 -60,000
2022 Expense (O) NI (U)
-60,000 60,000
Expense (U) NI (O)
78,000 -78,000

b 2020 Expense (O) NI (U) RE (U)

-32,000 32,000 32,000
2021 Expenses (U) NI (O) RE (O)
32,000 -32,000 -32,000
Expense (O) NI (U) RE (U)
-25,000 25,000 25,000
2022 Expenses (U) NI (O)
25,000 -25,000
Expense (O) NI (U)
-22,400 22,400

c 2020 Income (U) NI (U) RE (U)

18,000 18,000 18,000
2021 Income (O) NI (O) RE (O)
-18,000 -18,000 -18,000

d 2020 Income (O) NI (O) RE (O)

-7,000 -7,000 -7,000
Expenses (O) NI (U) RE (U)
-4,200 4,200 4,200
2021 Expenses (O) NI (U) RE (U)
-4,200 4,200 4,200
2022 Expenses (O) NI (U)
-4,200 4,200

e 2022 Income (O) NI (O) RE (O)

-40,000 -40,000 -40,000
 Open Closed
Retained Earnings 60,000
Wage Expense 60,000
Wage Expense 78,000 Retained Earnings 78,000
Accrued Wage Expense 78,000 Accrued Wage Expense

Office Supplies Expense 25,000

Retained Earnings 25,000
Office Supplies 22,400 Office Supplies 22,400
Office Supplies Expense 22,400 Retained Earnings

No entry (counter-balanced) No entry (counter-balanced)

Retained Earnings 7,000 Retained Earnings 7,000

Income 7,000 Income
Accumulated Depreciation 12,600 Accumulated Depreciation 12,600
Depreciation Expense 4,200 Depreciation Expense
Retained Earnings 8,400 Retained Earnings

Advance from Customer 40,000 Advance from Customer 40,000

Rent Income 40,000 Retained Earnings
 2,020 2,021 2,022
Omitted Wage Expense
2020 (80,000) 80,000
2021 (60,000) 60,000
78,000 2022 (78,000)
Unused Office Supplies
2020 32,000 (32,000)
2021 25,000 (25,000)
2022 22,400
Interest Receivable Not Recorded 18,000 (18,000)
Overstated Gain on Sale of Equipment (18,000)
Overstated Depreciation Expense
2020 4,200
2021 4,200
22,400 2022 4,200
Understated Prepaid Rent (40,000)
Adjustment (43,800) (800) (56,400)
Unadjusted Profit 450,000 290,000 440,000
Adjusted Income 406,200 289,200 383,600

7,000

4,200
8,400

40,000
Overstatement of Ending Inventories
2021 EI (O) C/S (U) NI (O) RE (O)
(29,000) 29,000 (29,000) (29,000)
2022 BI (O) C/S (O) NI (U)
(29,000) (29,000) 29,000
EI (O) C/S (U) NI (O)
(33,000) 33,000 (33,000)

Omission of depreciation
2021 Expenses (U) NI (O) RE (O)
15,000 (15,000) (15,000)
2022 Expenses (U) NI (O)
15,000 (15,000)

Understatement of Comission Receivable

2021 Income (U) NI (U) RE (U)
22,000 22,000 22,000
2022 Income (O) NI (O)
(22,000) (22,000)
Income (U) NI (U)
18,000 18,000

Unrecorded purchase
2021 Purchase (U) NI (O) RE (O)
60,000 (60,000) (60,000)
2022 Purchase (O) NI (U)
(60,000) 60,000

Not Included in Ending Inventory

2021 EI (U) C/S (O) NI (U) RE (U)
60,000 (60,000) 60,000 60,000
2022 BI (U) C/S (U) NI (O)
60,000 60,000 (60,000)
Retained Earnings 29,000
Beginning Inventory 29,000
Ending Inventory 33,000
Cost of Goods Sold 33,000

Retained Earnings 15,000

Depreciation Expense 15,000
Accumulated Depreciation 30,000

Comission Income 22,000

Retained Earnings 22,000
Comission Receivable 18,000
Comission Income 18,000

Retained Earnings 60,000

Purchase 60,000
Beginning Inventory 60,000
Retained Earnings 60,000
 2,021 2,022
Overstatement of Ending Inventory
2021 (29,000) 29,000
2022 (33,000)
Omission of Depreciation
2021 (15,000)
2022 (15,000)
Understatement of Comission Receivable
2021 22,000 (22,000)
2022 18,000
Unrecorded Purchase (60,000) 60,000
Not Included in Ending Inventory 60,000 (60,000)
Adjustment in Profit (22,000) (23,000)
Unadjusted Profit 550,000 700,000
Adjusted Profit 528,000 677,000
 Retained Earnings Total Assets
2021 2022
Overstatement of Ending Inventory (29,000) (33,000)
Omission of Depreciation (15,000) (30,000)
Understatement of Comission Receivable 22,000 18,000
Unrecorded Purchase (60,000)
Not Included in Ending Inventory 60,000 60,000
(22,000) 15,000
Prepaid Insurance Expense (O) NI (U) Net Income
-200,000 200,000 Prepaid 200,000
Accrued Wages Expense (U) NI (O) Accrued Wage -250,000
250,000 -250,000 Adavance -300,000
Rent Revenue Collected in Advance Income (O) NI (O) Interest Rec 100,000
-300,000 -300,000 Adjustment -250,000
Interest Receivable Income (U) NI (U) Unadjusted Profit 5,000,000
100,000 100,000 Adjusted Profit 4,750,000
Net Income
Ending Inventory 2021 EI (U) CS (O) NI (U) RE (U)
Overstated 200,000 -200,000 200,000 200,000
2022 BI (U) CS (U) NI (O)
200,000 200,000 -200,000
EI (O) CS (U) NI (O)
-300,000 300,000 -300,000

Depreciation 2021 Expense (U) NI (O) RE (O)

50,000 -50,000 -50,000
2022 Expense (O) NI (U)
-100,000 100,000
Beginning Inventory 200,000
Retained Earnings 200,000
Cost of Goods Sold 300,000
Ending Inventory 300,000

Retained Earnings 50,000

Accumulated Depreciation 50,000
Accumulated Depreciation 100,000
Depreciation Expense 100,000