Exercise 5-12 Analysis of inventory errors LO A2Vibrant Company had $1,090,000 of sales in each of Year 1, Year 2, and Year 3, and it purchased merchandise costing $595,000 ineach of those years. It also maintained a $390,000 physical inventory from the beginning to the end of that three-year period. Inaccounting for inventory, it made an error at the end of Year 1 that caused its Year 1 ending inventory to appear on its statements as$370,000 rather than the correct $390,000.Required:1. Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3.2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit foreach of Year 1, Year 2, and Year 3.Complete this questions by entering your answers in the below tabs.Required 1Required 2Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3.VIBRANT COMPANYComparative Incóme StatementsYear 1Year 2Year 33-year totalCost of goods soldCost of goods soldGross profit orkSavedaccounting for inventory, it made an error at the end of Year 1 that caused its Year 1 ending inventory to appear on its statements as$370,000 rather than the correct $390,000.Required:1. Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3.2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit foreach of Year 1, Year 2, and Year 3.Complete this questions by entering your answers in the below tabs.Required 1Required 2Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3.VIBRANT COMPANYComparative Income StatementsYear 1Year 2Year 33-year totalCost of goods soldCost of goods soldGross profit< Required 1Required 2 >

The income statement explains the financial performance of the company for a particular period of…

Exercise 5-12 Analysis of inventory errors LO A2 Vibrant Company had $1,090,000 of sales in each of Year 1, Year 2, and Year 3, and it purchased merchandise costing $595,000 each of those years. It also maintained a $390,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of Year 1 that caused its Year 1 ending inventory to appear on its statements $370,000 rather than the correct $390,000. Required: 1. Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3. 2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit each of Year 1, Year 2, and Year 3.

Exercise 5-12 Analysis of inventory errors LO A2 Vibrant Company had $1,090,000 of sales in each of Year 1, Year 2, and Year 3, and it purchased merchandise costing $595,000 each of those years. It also maintained a $390,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of Year 1 that caused its Year 1 ending inventory to appear on its statements $370,000 rather than the correct $390,000. Required: 1. Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3. 2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit each of Year 1, Year 2, and Year 3.

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter6: Inventories

Section: Chapter Questions

Problem 6.6BPR: Lower-of-cost-or-market inventory Data on the physical inventory of Katus Products Co. as of...

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Lower-of-cost-or-market inventory Data on the physical inventory of Katus Products Co. as of December 31 follows: Description Inventory Quantity Market Value per Unit (Net Realizable Value) A54 37 56 C77 24 178 F66 30 132 H83 21 545 K12 375 5 Q58 90 18 S36 8 235 V97 140 20 Y88 17 744 Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Description Last Purchases Invoice Next-to-the-Last Purchases Invoice Quantity Purchased Unit Cost Quantity Purchased Unit Cost A54 30 60 40 58 C77 25 174 15 180 F66 20 130 15 128 H83 6 547 15 540 K12 500 6 500 7 Q58 75 25 80 26 S36 5 256 4 260 V97 100 17 115 16 Y88 10 750 8 740 Instructions Determine the inventory at cost and also at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the inventory sheet, and complete the pricing of the inventory. When there are two different unit costs applicable to an item, proceed as follows: 1. Draw a line through the quantity, and insert the quantity and unit cost of the last purchase. 2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase. 3. Total the cost and market columns and insert the lower of the two totals in the LCM column. The first item on the inventory sheet has been completed as an example. Inventory Sheet December 31 Description Unit Inventory Quantity Cost per Unit Market Value per Unit(Net Realizable Value) Total Cost Market LCM A54 37 30 60 56 1,800 1,680 7 58 56 406 392 2,206 2,072 2,072
Problem 13 Four Company, which maintains it inventory using the perpetual system, had the followingbalances at the end of the year: Cost of Goods Sold 4,500,000Net Sales 6,000,000Inventory 1,200,000Accounts Payable 3,000,000Accounts Receivable 4,000,000 Compute the adjusted balances of the above items after considering the following information:-Four consigned to Ellie, at the beginning of December 2020, goods costing P100,000 andpaid freight of P5,000. The relevant commission is 5% of the selling price of P200,000. Bythe end of the year, Ellie has not remitted yet any of the sales but reported on January 5,2021 that by December 31, 2020, all of the goods were sold. The said inventory wasincluded in the physical count of the company.- The company sold on FOB shipping point goods costing P200,000 at selling price which is150% of cost on December 29, 2020, sale was recognized on the said date, and goodswere excluded from the inventory count. It was later found out that said goods were…
QUESTION 25 Zenith Company's Merchandise Inventory account at year-end has a balance of $91,820, but a physical count reveals that only $90,450 of inventory exists. The adjusting entry to record this $1,370 of inventory shrinkage is: Account Title Debit Credit Cost of Goods Sold 90,450 Merchandise Inventory 90,450 Account Title Debit Credit Inventory Shrinkage Expense 1,370 Cost of Goods Sold 1,370 Account Title Debit Credit Purchases Discounts 1,370 Cost of Goods Sold 1,370
Exercise 5-17 (Algo) Analyzing inventory errors LO A2 Vibrant Company had $950,000 of sales in each of Year 1, Year 2, and Year 3, and it purchased merchandise costing $525,000 in each of those years. It also maintained a $250,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of Year 1 that caused its Year 1 ending inventory to appear on its statements as $230,000 rather than the correct $250,000. 1. Determine the correct amount of the company's gross profit in each of Year 1, Year 2. and Year 3. 2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of Year 1, Year 2, and Year 3. Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3. VIBRANT COMPANY Comparative Income Statements Year 2 Sales Cost of goods sold Beginning inventory Cost of purchases Cost of goods sold Gross…
Exercise 6-17 (Algo) Analyzing inventory errors LO A2 Vibrant Company had $1,000,000 of sales in each of Year 1, Year 2, and Year 3, and it purchased merchandise costing $550,000 in each of those years. It also maintained a $300,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of Year 1 that caused its Year 1 ending inventory to appear on its statements as $280,000 rather than the correct $300,000. 1. Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3. 2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the correct amount of the company's gross profit in each of Year 1, Year 2, and Year 3. VIBRANT COMPANY Cost of goods sold Cost of goods sold…
Problem 5-24A (Algo) Effect of inventory errors on financial statements LO 5-3 The following income statement was prepared for Frame Supplies for Year 1. FRAME SUPPLIES Income Statement For the Year Ended December 31, Year 1 Sales Cost of goods sold Gross margin Operating expenses Net income 30,780 (8,520) $ 22,260 During the year-end audit, the following errors were discovered: 1. A $1,588 payment for repairs was erroneously charged to the Cost of Goods Sold account. (Assume that the perpetual Inventory system is used.) 2. Sales to customers for $2,243 at December 31, Year 1, were recorded in the books for Year 1. Also, the $1,422 cost of goods sold was not recorded. 3. A mathematical error was made in determining ending Inventory. Ending Inventory was understated by $973. (The Inventory account was mistakenly written down to the Cost of Goods Sold account.) Required Determine the effect, if any, of each of the errors on the following items. Give the dollar amount of the effect and…
Exercise 13-4A (Algo) Inventory turnover LO 13-2 Selected financial information for Zachary Company for Year 4 follows: Sales $ 1,750,000 Cost of goods sold 1,225,000 Merchandise inventory Beginning of year 155,000 End of year 190,000 RequiredAssuming that the merchandise inventory buildup was relatively constant, how many times did the merchandise inventory turn over during Year 4? (Round your answer to 2 decimal places.)
Question 33 Boxer Inc. reported inventory at the beginning of the current year of $360,000 and at the end of the current year of $411,000. If net sales for the current year are $2,214,600 and the corresponding cost of sales totaled $1,879,400, what is the inventory turnover for the current year? O 5.74. O 4.57. O 5.39. O 4.88.
Problem 6 INVENTORY, On January 1, 20X6, the River Company's beginning inventory $400,000. During 20X6, River purchased $1,900,000 of additional inventory. On December 31, thre 20X6, River's ending inventory was $500,000. a. What is the inventory turnover and the age of inventory for 20X6? b. If the inventory turnover in 20X5 was 3.3 and the average age of the inventory was 100.6 days, evaluate the results 20X6.
Exercise 5-19 (Algo) Inventory turnover and days' sales in inventory LO A3 The following is information for Palmer Company. Year 3 $ 613,825 99,400 Cost of goods sold Ending inventory Year 2 $ 396,650 89,750 Use the above information to compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2. From Year 2 to Year 3, did Palmer improve its (a) inventory turnover and (b) days' sales in inventory? Inventory turnover Days' sales in inventory Year 1 $361,300 94,500 Use the above information to compute inventory turnover for Year 2, and its days' sales in inventory at December 31, Year 2. Numerator / Denominator Inventory turnover Days' sales in inventory Use the above information to compute inventory turnover for Year 3, and its days' sales in inventory at December 31, Year 3. Numerator / Denominator Ratio < Prev 0 0 4 of 9 # Did Palmer improve its (a) inventory turnover from Year 2 to Year 3 and (b) days' sales in inventory from…
Exercise 6-5A Calculate inventory amounts when costs are declining (LO6-3) Skip to question [The following information applies to the questions displayed below.] During the year, Trombley Incorporated has the following inventory transactions. Date Transaction Numberof Units UnitCost Total Cost Jan. 1 Beginning inventory 30 $ 32 $ 960 Mar. 4 Purchase 35 31 1,085 Jun. 9 Purchase 40 30 1,200 Nov. 11 Purchase 40 28 1,120 145 $ 4,365 For the entire year, the company sells 111 units of inventory for $40 each. 1. Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.
QUESTION 14 Eneri Company's inventory records show the following data: Units Unit Cost Inventory, January 1 10,000 $9.20 Purchases: June 18 9,000 8.00 November 8 6,000 7.00 A physical inventory on December 31 shows 4,000 units on hand. Eneri uses the periodic inventory method. Under the FIFO method, the December 31 ending inventory is valued at $32,267. $32,960. O $28,000. O $36,800.