Use the following information for questions.
Fairfax Inc. began operations on January 1, 2019. Financial statements for 2019 and 2020 contained the following errors: In addition, on December 31, 2020 fully depreciated equipment was sold for $ 7,200, but the sale was NOT recorded until 2021. No corrections have been made for any of the errors. Ignore income tax considerations.
-The total effect of the errors on Fairfax's working capital at December 31, 2020 is that working capital is understated by
A) $ 100,200.
B) $ 79,200.
C) $ 46,200.
D) $ 31,200.

Question

Use the following information for questions.
Fairfax Inc. began operations on January 1, 2019. Financial statements for 2019 and 2020 contained the following errors:  In addition, on December 31, 2020 fully depreciated equipment was sold for $ 7,200, but the sale was NOT recorded until 2021. No corrections have been made for any of the errors. Ignore income tax considerations.
-The total effect of the errors on Fairfax's working capital at December 31, 2020 is that working capital is understated by
A) $ 100,200. 
B) $ 79,200. 
C) $ 46,200. 
D) $ 31,200.

Quizplus · Accepted Answer

The Answer of Use the following information for questions.
Fairfax Inc. began operations on January 1, 2019. Financial statements for 2019 and 2020 contained the following errors:  In addition, on December 31, 2020 fully depreciated equipment was sold for $ 7,200, but the sale was NOT recorded until 2021. No corrections have been made for any of the errors. Ignore income tax considerations.
-The total effect of the errors on Fairfax's working capital at December 31, 2020 is that working capital is understated by
A) $ 100,200. 
B) $ 79,200. 
C) $ 46,200. 
D) $ 31,200.

Use the Following Information for Questions