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in their solution, they are add back 465 to retained earnings at 1.10.X5. simliarly, they are supposed to add on 20×4, 20×6. why they add only on 20×5.?
bpp revision kit q no. 21.
The qn asks us to prepare financial statements for the year ended 30 September 20X7 with comparative figures. This means we are asked to prepare statements for 2 periods:
1 October 20X6 – 30 September 20X7
1 October 20X5 – 30 September 20X6 (comparative)prior year adjustments are done by adjusting the retained earning opening figure. In this qn, our opening retained earning is as at 1 Oct 20X5. once we make adjustment to this figure, carrying amount will be taken as opening figure for next period. If we adjust retained earnings again at 1 Oct 20X6, it will be double-counting.
about 20X4…if we were asked to prepare financial statements for the yr ended 30 September 20X6 with comparative figures, then the adjustment will be made to the retained earning opening figure as on 1 Oct 20X4.
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