How do you determine the amount of overstated or understated categories?
Homework Answers
Downstream transportation is a period expense. But the CFO has misclassified that as product cost.
Transporatation cost assigned per unit = $ 625,600 / 9,200 = $ 68 per unit produced..
But all units produced did not get sold.
Ending inventory = 9,200 - 7,800 = 1,400 units.
Therefore, the CFO managed to defer 1,400 x $ 68 = $ 95,200 of the total transportation expense to the next accounting period.
| Asset ( Inventory) | Overstated | $ 95,200 |
| Liabilities | N/A | - |
| Retained Earnings | Overstated | $ 95,200 |
| Reserve | N/A | - |
| Expense | Understated | $ 95,200 |
| Net Income | Overstated | $ 95,200 |
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Case Corp. had accounts payable of $100,000 recorded in the
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In Case’s December 31, 2012 balance sheet, the accounts payable
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1.Given:
Net Income is:
Select one:
a. Understated $16
b. Understated $24
c. Overstated $6
d. Understated $26
e. Understated $10
2.
Case Corp. had accounts payable of $100,000 recorded in the
general ledger as of December 31, 2012. The Accounts Payable
balance included the following recorded purchases on credit:
In Case’s December 31, 2012 balance sheet, the accounts payable
should be reported in the amount of:
Select one:
a. $125,000
b. $92,000
c. $121,000
d. $79,000
e. $75,000
3....
Please show what journal entries you would use and how assets,
liabilities and net income are effected (understated, overstated,
no effect). How is inventory taken into account?
$6,000 for 12 months of rent received from one of the tenants on October 1. 33. Alpha recorded a cash purchase of inventory (using the periodic inventory system) but erroneously recorded it as a debit to Supplies and a credit to Accounts Payable. The inventory was counted in ending inventory
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$671,600 as a product cost in an accounting period when the company
made 9,200 microscopes and sold 7,500 microscopes. Perez rewards
its officers with bonuses that are based on net earnings.
Required
Indicate whether the elements on the financial statements (i.e.,
assets, liabilities, equity, revenue, expense, and net income)
would be overstated or understated as a result of the
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