P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2014 2013 2012 $925,000 750,000 550,000 90,000 $900,000 Total assets Owner's equity Cost of goods sold 700,000 550,000 Profit 80,000 Alyssa Company made the following errors in determining its ending inventory: $850,000 650,000 دادات 2 500,000 2. Owner's equity 3. Cost of goods sold 4. Profit 70,000 560 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets (b) Indicate the effect of these errors (overstated, understated, or no effect) on cash at the end of 2012, 2013, and 2014.

P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2014 2013 2012 $925,000 750,000 550,000 90,000 $900,000 Total assets Owner's equity Cost of goods sold 700,000 550,000 Profit 80,000 Alyssa Company made the following errors in determining its ending inventory: $850,000 650,000 دادات 2 500,000 2. Owner's equity 3. Cost of goods sold 4. Profit 70,000 560 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets (b) Indicate the effect of these errors (overstated, understated, or no effect) on cash at the end of 2012, 2013, and 2014.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 9RE: RE7-8 Johnson Company uses a perpetual inventory system. On October 23, Johnson purchased 100,000 of...

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The following are independent errors made by a company that uses the periodic inventory system: a. Goods in transit, purchased on credit and shipped FOB destination, 10,000, were included in purchases but not in the physical count of ending inventory. b. Purchase of a machine for 2,000 was expensed. The machine has a 4-year life, no residual value, and straight-line depreciation is used. c. Wages payable of 2,000 were not accrued. d. Payment of next years rent, 4,000, was recorded as rent expense. e. Allowance for doubtful accounts of 5,000 was not recorded. The company normally uses the aging method. f. Equipment with a book value of 70,000 and a fair value of 100,000 was sold at the beginning of the year. A 2-year, non-interest-bearing note for 129,960 was received and recorded at its face value, and a gain of 59,960 was recognized. No interest revenue was recorded and 14% is a fair rate of interest. Required: 1. Next Level Indicate the effect of each of the preceding errors on the companys assets, liabilities, shareholders equity, and net income in the year in which the error occurs. State whether the error causes an overstatement (+), an understatement (), or no effect (NE). 2. Prepare the correcting journal entry or entries required at the beginning of the year for each of the preceding errors, assuming the company discovers the error in the year after it was made. Ignore income taxes.
RE7-8 Johnson Company uses a perpetual inventory system. On October 23, Johnson purchased 100,000 of inventory on credit with payment terms of 1/15, net 45. Using the net price method, prepare journal entries to record Johnsons purchases on October 23 and the subsequent payment on October 31. Using the information from RE7-8, prepare journal entries to record Johnsons purchase on October 23 and the subsequent payment on November 30.
Sandhill Corporation had the following items in inventory as at December 31, 2023: Item No. A1 B4 C2 D3 Quantity 110 110 160 120 Unit Cost $3.40 2.00 8.40 7.60 NRV $3.90 1.40 10.10 7.50 Assume that Sandhill uses a periodic inventory system, and that none of the inventory items can be grouped together for accounting purposes. The opening inventory on January 1, 2023, was $3,200 in total.
P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2014 2013 2012 $925,000 750,000 550,000 $900,000 700,000 550,000 80,000 $850,000 650,000 500,000 526o 70,000 Total assets Owner's equity Cost of goods sold Profit 90,000 Alyssa Company made the following errors in determining its ending inventory: 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets 2. Owner's equity 3. Cost of goods sold 4.…
P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2013 2012 $850,000 650,000 500,000 526 70,000 5600 2014 $925,000 750,000 550,000 90,000 $900,000 Total assets Owner's equity Cost of goods sold 700,000 550,000 Profit 80,000 Alyssa Company made the following errors in determining its ending inventory: 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets 2. Owner's equity 3. Cost of goods sold…
Sandhill Corporation had the following items in inventory as at December 31, 2023: Unit Item No. Quantity Cost NRV A1 160 $3.25 $4.90 B4 140 2.65 2.05 C2 125 2.25 10.45 D3 95 8.25 8.05 Assume that Sandhill uses a perpetual inventory system, and that none of the inventory items can be grouped together for accounting purposes. (a1) Prepare the year-end adjusting entry required to adjust to the lower of cost or net realizable value on an item-by-item basis using the direct method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.)
Required information P7-6 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-5 [The following information applies to the questions displayed below.] The income statement for Pruitt Company summarized for a four-year period shows the following: Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income P7-6 Part 1 2016 2017 $2,041,000 $2,469,000 1,618,000 1,492,000 549,000 484,000 65,000 19,500 $45,500 Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income 851,000 496,000 355,000 106,500 $248,500 496,000 334,000 2018 $2,712,000 1,781,000 100,200 233,800 931,000 522,000 409,000 122,700 $286,300 An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $21,000. The company uses a periodic inventory system. Answer is complete but not entirely correct. PRUITT COMPANY Income Statement For the Four-Year Period 2016 2017 $ 2,041,000…
The Luna Company made the following two errors in counting ending inventory: 1. Understated 12/31/22 inventory by $150 Overstated 12/31/23 inventory by $450 2. Indicate the error in the following items. Show supporting computations. 12/31/23 Retained Earnings $ over/under 2024 Net Income $ over/under 2022 2023 2024 U/S 150 O/S 450 a. b. Beg. Inv. Purchases End. Inv CGS Gross Profit Net Income Ret. Earnings
Current Attempt in Progress Crane Corporation had the following items in inventory as at December 31, 2023: Unit Item No. Quantity Cost NRV A1 120 $3.00 $3.50 B4 140 2.20 2.10 C2 150 8.20 9.40 D3 170 7.20 6.80 Assume that Crane uses a periodic inventory system, and that none of the inventory items can be grouped together for accounting purposes. The opening inventory on January 1, 2023, was $3,200 in total. (a) Prepare the year-end adjusting entries required to adjust to the lower of cost or net realizable value using the direct method. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) SUPPORT hp
12/Ibri company has an Inventory of RO 68,000 and RO 134,000 of Cost of goods sold in its unadjusted trial balance during the year 2018. The physical inventory count came to RO 61,000. What is the adjusting journal entry to be used to record the above? a. Merchandise inventory RO 7,000 Dr/ Cost of goods sold RO 7,000 Cr b. Cost of goods sold RO 7,000 Dr / Merchandise inventory RO 7,000 Cr c. Cost of goods sold RO 68,000 Dr / Merchandise inventory RO 68,000 Cr d. Merchandise inventory RO 61,000 Dr/ Cost of goods sold RO 61,000 Cr
The following information was taken from the records of Tinker Enterprises: 2019 2018 Beginning inventory $60,000 $50,000 Cost of goods purchased 420,000 400,000 Cost of goods available for sale 480,000 450,000 Ending inventory 55,000 60,000 Cost of goods sold $425,000 $390,000 The following two errors were made in the physical inventory counts: 1. 2018 ending inventory was understated by $8,000. 2. 2019 ending inventory was overstated by $4,000. Compute the correct cost of goods sold for both 2018 and 2019. 2019 2018 Cost of goods sold $ %24
Effects of an Error in Ending Inventory Waymire Company prepared the partial statements of earnings presented below for 2022 and 2021. 2022 2021 Sales revenue $538,200 $483,700 Cost of goods sold: Beginning inventory $39,300 $32,100 Purchases 343,200 292,700 Cost of goods available for sale 382,500 324,800 Ending inventory (46,800) 335,700 (39,300) 285,500 Gross margin 202,500 198,200 Operating expenses (167,200) (151,600) Income before taxes $ 35,300 $ 46,600 During 2023, Waymire's accountant discovered that ending inventory for 2022 had been overstated by $8,200. Required: 1. Prepare corrected 1. Prepare corrected statements of earnings for 2022 and 2021. for 2022 and 2021. Use the minus sign for negative values. 2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item.…