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Splish Tool Company's December yearend financial statements contained the following errors.
An insurance premium of $ was prepaid in covering the years and The entire amount was charged to
expense in In addition, on December fully depreciated machinery was sold for $ cash, but the entry was not
recorded until There were no other errors during or and no corrections have been made for any of the errors.
Ignore income tax considerations.
a Compute the total effect of the errors on net income.
Total effect of errors on net income $
b Compute the total effect of the errors on the amount of Splish's working capital at December
Total effect on working capital $
c Compute the total effect of the errors on the balance of Splish's retained earnings at December
Total effect on retained earnings $
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