San Diego State University Operations And Supply Chain Management Assignment Help - Interest

Question - Comprehensive Error Analysis on March 5, 2011, you were hired by Hemingway Inc., a closely held
company, as a staff member of its newly created internal auditing department. While reviewing the
company’s records for 2009 and 2010, you discover that no adjustments have yet been made for the
items listed below. Items
1. Interest income of $14,100 was not accrued at the end of 2009. It was recorded when received in
February 2010.
2. A computer costing $4,000 was expensed when purchased on July 1, 2009. It is expected to have
a 4-year life with no salvage value. The company typically uses straight-line depreciation for all fixed
assets.
3. Research and development costs of $33,000 were incurred early in 2009. They were capitaliz ...Read More ed
and were to be amortized over a 3-year period. Amortization of $11,000 was recorded for 2009 and
$11,000 for 2010.
4. On January 2, 2009, Hemingway leased a building for 5 years at a monthly rental of $8,000. On
that date, the company paid the following amounts, which were expensed when paid.
Security deposit $20,000
First month’s rent 8,000
Last month’s rent 8,000
$36,000
5. The company received $36,000 from a customer at the beginning of 2009 for services that it is to
perform evenly over a 3-year period beginning in 2009. None of the amount received was reported as
unearned revenue at the end of 2009.
6. Merchandise inventory costing $18,200 was in the warehouse at December 31, 2009, but was
incorrectly omitted from the physical count at that date. The company uses the periodic inventory
method.
Indicate the effect of any errors on the net income figure reported on the income statement for the
year ending December 31, 2009, and the retained earnings figure reported on the balance sheet at
December 31, 2010. Assume all amounts are material, and ignore income tax effects. Using the
following format, enter the appropriate dollar amounts in the appropriate columns. Consider each item
independent of the other items. It is not necessary to total the columns on thegrid. ...Read Less

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