Question

Effects of an Error in Ending Inventory Waymire Company prepared the partial income statements presented below for 2019 and 2018. 2019 2018 $538,200 5483,700 Sales revenue Cost of goods sold: Beginning inventory Purchases Cost of goods available for sale Ending inventory Gross margin $39,300 343,200 382,500 (46,800) $32,100 292,700 324,800 (39,300) 335,700 $202,500 (167,200) $35,300 285,500 $198,200 (151,600) $46,600 Operating expenses Income before taxes During 2020, Waymire's accountant discovered that ending inventory for 2018 had been understated by $6,500. Required: 1. Prepare corrected income statements for 2019 and 2018. Use the minus sign for negative values. Waymire Company Income Statement For 2019 and 2018 2019 538,200 2019 2018 Sales revenue 2018 483,700 Cost of goods sold: Beginning inventory $ 31,100 x 343,200 Purchases $ 32,100 292,700 L324,800 1 -31,100 X 1 X Cost of goods available for sale Ending inventory 374,300 -46,800 1 x Gross margin Operating expenses 327,500 210,700 -167,200 293,700 X 190,000 -151,600 Income before taxes 43,500 x 38,400 x Feedback 2019 2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item (ignore the effect of income taxes). Use a minus sign (-) to indicate if an error is an understatement. If no entry is required, leave the amount box blank. Waymire Company Financial Statement For 2018 and 2019 2018 Beginning inventory 8,200 Ending inventory 8,200 X 8,200 x Stockholders' equity 8,200 x 8,200 Cost of coods sold Cost of goods sold 8,200 X 8,200 Gross margin 8,200 x 8,200 Income before taxes 8,200 X 8,200 xxxxxx

Answer 1

Particular	2019	2019	2018	2018
Sales Revenue		$ 538,200		$ 483,700
Cost of Goods sold:
Beginning Inventory	$ 45,800		$ 32,100
Purchases	$ 343,200		$ 292,700
Cost of goods available for sale	$ 389,000		$ 324,800
Ending inventory	$ (46,800)	$ 342,200	($ 45,800)	$ 279,000
Gross Margin		$ 196,000		$ 204,700
Operating Expenses		$ (167,200)		$ (151,600)
Income before taxes		$ 28,800		$ 53,100

2)

Particular	2019	2018
Beginning inventory	$ 6,500	$ 0
Ending Inventory	$ 0	$ 6,500
Stockholders' Equity	$ (6,500)	$ 6,500
Cost of goods sold	$ 6,500	$ (6,500)
Gross Margin	$ (6,500)	$ 6,500
Income before taxes	$ (6,500)	$ 6,500