Draft financial statements for a company showed a balance of retained earnings of $\$ 170000$ at
the year end.
The following information was then discovered.
1 An irrecoverable debt of $\$ 25000$ should have been written off.
2 An ordinary share dividend, $\$ 30000$, had been paid but not recorded.
3 Closing inventory was undervalued by $\$ 15000$.
What was the correct balance of retained earnings at the year end?
1 )
$\$ 100000$
2 )
$\$ 125000$
$\$ 130000$
4 )
$\$ 185000$
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