Homework Answers
5.
If in 2018, ending inventory is overstated by $13,000, it means that beginning inventory of the following year i.e. 2019 will be overstated by $13,000. Due to overstated beginning inventory in the year 2019, cost of goods sold will be overstated and thus net income will be understated in the year 2019.
Hence, correct option is (C)
6.
If in 2018, cost of goods sold is overstated by $22,000, it will not affect ending inventory of the following year. Thus, ending inventory of the following year will be correct.
Hence, correct option is (D)
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TET ş If in 2018 ending inventory is over stated by $ 13,000, what will happen to Net income for the following year...
Learning Objectives 5, 6 P6-31A Correcting inventory errors over a three-year period and computing inventory turnover...
Learning Objectives 5, 6 P6-31A Correcting inventory errors over a three-year period and computing inventory turnover and days' sales in inventory Empire State Carpets's books show the following data. In early 2020, auditors found that the ending merchandise inventory for 2017 was understated by $8,000 and that the ending merchandise inventory for 2019 was overstated by $9,000. The ending mer chandise inventory at December 31, 2018, was correct. 2. 2019, overstated $9,000 2019 2018 2017 Net Sales Revenue Cost of...
77) Given the following data: Ending inventory at cost $24,000 Ending inventory at current net realizable...
77) Given the following data: Ending inventory at cost $24,000 Ending inventory at current net realizable value 23,600 Cost of goods sold (before consideration of the lower-of-cost-and-net-realizable-value rule) 37,000 Which of the following depicts the proper account balance after the application of the lower-of-cost-and-net realizable value rule? A) Cost of goods sold will be $37,400. B) Cost of goods sold will be $36,400. C) Cost of goods sold will be $37,000. D) Ending inventory will be $24,000. 78) Inventory at...
39) On December 31. Year 1, Owings Corporation overstates the ending inventory by $5,000. How will...
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How would each of the following inventory errors affect net income for the year? Assume each...
How would each of the following inventory errors affect net income for the year? Assume each is the only error during the year. 1. Ending inventory is overstated by $3,000. 2. Ending inventory is understated by $1,500. 3. Beginning inventory is understated by $3,000. 4. Beginning inventory is overstated by $1,550. 1. Net income is overstated or understated? 2. by what amount?
The following information is presented for Riverbed Corporation. There income figures were computed without knowiedge of...
The following information is presented for Riverbed Corporation. There income figures were computed without knowiedge of the errors in ending Inventory. Assume that there was no error in the 2016 ending Inventory 2017 2018 2019 2020 2021 Net Income per Books $156,000 93,000 120,000 223,000 102,000 Error In Ending Inventory Overstated $26,800 Overstated 34,500 No error Understated 7,700 Understated 18,000 Prepare a worksheet to show the adjusted net income figure for each year from 2017 to 2021 after taking into...
The net income per books of Sheffield Industries Limited was determined without any knowledge of the...
The net income per books of Sheffield Industries Limited was
determined without any knowledge of the following errors. The 2019
year was Sheffield’s first year in business. No dividends have been
declared or paid.
Year
Net Income
per Books
Error in
Ending Inventory
2015
$50,600
Overstated
$5,800
2016
54,400
Overstated
9,500
2017
55,000
Understated
11,100
2018
56,600
No error
2019
59,100
Understated
2,500
2020
60,600
Overstated
9,900
A. Prepare a work sheet to show the adjusted net income figure
for...
The net income per books of Debra King Company was determined without knowledge of the errors indicated below. Yea...
The net income per books of Debra King Company was determined without knowledge of the errors indicated below. Year 2015 2016 2017 2018 2019 2020 Net Income per Books $48,900 50,950 52,950 55,100 52,170 59,160 Error in Ending Inventory Overstated $ 2,770 Overstated Understated 12.030 No error Understated 1,970 Overstated 8.740 Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. Net Income Per Books Corrected Net...
The following information is presented for Blue Corporation. The net income figures were computed without knowledge...
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Partial income statements for Sherwood Company summarized for a four-year period show the following: Net Sales C...
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Capwell Corporation uses a periodic inventory system. The company's ending inventory on December 31, 2018, its fis...
Capwell Corporation uses a periodic inventory system. The company's ending inventory on December 31, 2018, its fiscal-year end, based on a physical count, was determined to be $341,000. Capwell's unadjusted trial balance also showed the following account balances Purchases, $770,000, Accounts payable, $285,000, Accounts receivable. $300,000. Sales revenue, $950,000 The internal audit department discovered the following items 1. Goods valued at $47,000 held on consignment from Dix Company were included in the physical count but not recorded as a purchase....
Learning Objectives 5, 6 P6-31A Correcting inventory errors over a three-year period and computing inventory turnover and days' sales in inventory Empire State Carpets's books show the following data. In early 2020, auditors found that the ending merchandise inventory for 2017 was understated by $8,000 and that the ending merchandise inventory for 2019 was overstated by $9,000. The ending mer chandise inventory at December 31, 2018, was correct. 2. 2019, overstated $9,000 2019 2018 2017 Net Sales Revenue Cost of...
39) On December 31. Year 1, Owings Corporation overstates the ending inventory by $5,000. How will this affect the amount of retained earnings shown on the balance sheet at December 31, Year 2? A) Retained Earnings will be correctly stated. B) Retained Earnings will be understated by $5,000. C) Retained Earnings will be overstated by $5,000. D) Cannot be determined with the above information.
The following information is presented for Riverbed Corporation. There income figures were computed without knowiedge of the errors in ending Inventory. Assume that there was no error in the 2016 ending Inventory 2017 2018 2019 2020 2021 Net Income per Books $156,000 93,000 120,000 223,000 102,000 Error In Ending Inventory Overstated $26,800 Overstated 34,500 No error Understated 7,700 Understated 18,000 Prepare a worksheet to show the adjusted net income figure for each year from 2017 to 2021 after taking into...
The net income per books of Sheffield Industries Limited was
determined without any knowledge of the following errors. The 2019
year was Sheffield’s first year in business. No dividends have been
declared or paid.
Year
Net Income
per Books
Error in
Ending Inventory
2015
$50,600
Overstated
$5,800
2016
54,400
Overstated
9,500
2017
55,000
Understated
11,100
2018
56,600
No error
2019
59,100
Understated
2,500
2020
60,600
Overstated
9,900
A. Prepare a work sheet to show the adjusted net income figure
for...
The net income per books of Debra King Company was determined without knowledge of the errors indicated below. Year 2015 2016 2017 2018 2019 2020 Net Income per Books $48,900 50,950 52,950 55,100 52,170 59,160 Error in Ending Inventory Overstated $ 2,770 Overstated Understated 12.030 No error Understated 1,970 Overstated 8.740 Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. Net Income Per Books Corrected Net...
Partial income statements for Sherwood Company summarized for a four-year period show the following: Net Sales Cost of Goods Sold Gross Profit 2015 $2,200,000 1,496,000 $ 704,000 2016 $2,600,000 1,742,00 $ 858,000 1 2017 $2,700,000 ,863,eee $837,000 2018 $3,200,000 2,176,000 $1,024,000 An audit revealed that in determining these amounts, the ending inventory for 2016 was overstated by $22.000. The inventory balance on December 31, 2017, was accurately stated. The company uses a periodic inventory system. Required: 1. Restate the partial...
Capwell Corporation uses a periodic inventory system. The company's ending inventory on December 31, 2018, its fiscal-year end, based on a physical count, was determined to be $341,000. Capwell's unadjusted trial balance also showed the following account balances Purchases, $770,000, Accounts payable, $285,000, Accounts receivable. $300,000. Sales revenue, $950,000 The internal audit department discovered the following items 1. Goods valued at $47,000 held on consignment from Dix Company were included in the physical count but not recorded as a purchase....
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