Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 10, Problem 13PB
Company Edgar reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 12,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
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Students have asked these similar questions
For each of the following inventory errors occurring in 2021, determine the effect of the error on 2021's cost of goods sold, net income,
and retained earnings using understated (U), overstated (O), or no effect (NE). Assume that the error is not discovered until 2022 and
that a periodic inventory system is used. Ignore income taxes.
Cost of Goods
Sold
Retained
Net Income
Earnings
1.
Overstatement of ending inventory
U
2.
Overstatement of purchases
3.
Understatement of beginning inventory
4.
Freight-in charges are understated
5
Understatement of ending inventory
6.
Understatement of purchases
7.
of beginning inventory
8.
Understatement of purchases plus understatement of ending inventory by the same amount
The accountant for Suzanne Company made the following errors related to inventory in 2020:
1.
The beginning inventory for 2020 was overstated by $1,375 due to an error in the physical count.
2.
A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the ending inventory.
Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors?
Set
Cost of Goods Sold
Gross Profit
Net Income
I.
Overstated
Understated
Understated
II.
Overstated
Understated
No effect
III.
Understated
Overstated
Overstated
IV.
No effect
No effect
No effect
a.
Set I
b.
Set II
c.
Set III
d.
Set IV
Vader Corporation made two errors in counting inventory: Ending inventory for 2019 was overstated by $15,000, and ending inventory for 2020 was understated by $12,000. If neither error was corrected, what will be the error (before taxes) in 2020 net income?
a.Overstated $27,000.
b.Understated $27,000.
c.Overstated $3,000.
d.Understated $3,000.
Chapter 10 Solutions
Principles of Accounting Volume 1
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When prices are rising (inflation), which costing...Ch. 10 - Trini Company had the following transactions for...Ch. 10 - Trini Company had the following transactions for...Ch. 10 - Calculate the cost of goods sold dollar value for...Ch. 10 - Use the first-in, first-out (FIFO) cost allocation...Ch. 10 - Use the last-in, first-out (LIFO) cost allocation...Ch. 10 - Use the weighted-average (AVG) cost allocation...Ch. 10 - Prepare journal entries to record the following...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Compare the calculations for gross margin for A76...Ch. 10 - Company Elmira reported the following cost of...Ch. 10 - Assuming a companys year-end inventory were...Ch. 10 - Use the following information relating to Shana...Ch. 10 - Use the following information relating to Clover...Ch. 10 - When prices are falling (deflation), which costing...Ch. 10 - DeForest Company had the following transactions...Ch. 10 - 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