Question

The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to be $461,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $61,000. The purchase was recorded and paid for in 2019. Another supplier shipment costing $25,500 was correctly recorded as a purchase in 2018. However, the merchandise, shipped FOB shipping point, was not received until 2019 and was incorrectly omitted from the physical count. A third purchase, shipped from a supplier FOB shipping point on December 28, 2018, did not arrive until January 3, 2019. The merchandise, which cost $91,000, was not included in the physical count and the purchase has not yet been recorded. The company uses a periodic inventory system. Required: 1. Determine the correct December 31, 2018, inventory balance and, assuming that the errors were discovered after the 2018 financial statements were issued, analyze the effect of the errors on 2018 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a journal entry to correct the errors. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Event General Journal Credit Retained earnings Inventory Accounts payable Debit 35,500 116,500 152,000 X < Required 1 Required 2 >

Answer 1

Answer Net ettect understatd by undesstatid by f15a,000 understald 3 undeistatd by$6.000 Pervchases q000 understakd undcystaled &y 116,500 understatd by 35500 nding invertoy Cost d GOods sold byas,500 9000 Cost dgoods sol d- Begiaaing mucntory t Cost goods sold $ G1,00091,000-16,C00 -La,000 -16,500 $35S00 -7 tost gods sold undes sladed by 35SO0, henee ove 1stated by 35500 Net 1ncome and Relaind Eamings Parliculars Conut indiag inuelony CastGood old Netncome Rained Amount C) understatd endenstaded cucsta td Oxsctated 161500 35500 35500 3.5500

Journat Ety's Debit D Crdit Paretiteshars invereloy Ale Dr Re-lained 2aning Grods sold Al To Lost {G,S00 35S00 వ ి 5