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ssume that because of a clerical error, the ending inventory is reported to be 1,070 units rather than the actual in hand. a. If FIFO is used, calculate the amount of the understatement or overstatement in the cost of sales for the first urrent year. Overstatement of cost of sales

ssume that because of a clerical error, the ending inventory is reported to be 1,070 units rather than the actual in hand. a. If FIFO is used, calculate the amount of the understatement or overstatement in the cost of sales for the first urrent year. Overstatement of cost of sales

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter10: Inventory
Section: Chapter Questions
Problem 2TP: Assume your company uses the periodic inventory costing method, and the inventory count left out an...
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Assume that because of a clerical error, the ending inventory is reported to be 1,070 units rather than the actual number of units (1,170) on hand. 5a. If FIFO is used, calculate the amount of the understatement or overstatement in the cost of sales for the first six months of the current year. Overstatement of cost of sales 5b. If FIFO is used, calculate the amount of the understatement or overstatement in the current assets at June 30 of the current year. Understatement of current assets
Transcribed Image Text:Assume that because of a clerical error, the ending inventory is reported to be 1,070 units rather than the actual number of units (1,170) on hand. 5a. If FIFO is used, calculate the amount of the understatement or overstatement in the cost of sales for the first six months of the current year. Overstatement of cost of sales 5b. If FIFO is used, calculate the amount of the understatement or overstatement in the current assets at June 30 of the current year. Understatement of current assets
Smart Company prepared its annual financial statements dated December 31, 2020. The company applies the FIFO inventory costing method; however, the company neglected to apply the LC&NRV valuation to the ending inventory. The preliminary 2020 statement of earnings follows: Sales revenue Cost of sales Beginning inventory Purchases Cost of goods available for sale Ending inventory (FIFO cost) Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense (30%) Net earnings Item Quantity ABCD Assume that you have been asked to restate the 2020 financial statements to incorporate the LC&NRV inventory valuation rule. You have developed the following data relating to the ending inventory at December 31, 2020: Acquisition Cost Unit Total 3,180 $4.30 $13,674 10,269 1,630 6.30 7,230 2.80 3,330 7.30 20,244 24,309 $68,496 $ 32,300 197,000 229,300 68,496 Net Realizable Value $5.30 4.80 4.80 5.30 $293,000 160,804 132, 196 63,300 68,896 20,669 $ 48,227
Transcribed Image Text:Smart Company prepared its annual financial statements dated December 31, 2020. The company applies the FIFO inventory costing method; however, the company neglected to apply the LC&NRV valuation to the ending inventory. The preliminary 2020 statement of earnings follows: Sales revenue Cost of sales Beginning inventory Purchases Cost of goods available for sale Ending inventory (FIFO cost) Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense (30%) Net earnings Item Quantity ABCD Assume that you have been asked to restate the 2020 financial statements to incorporate the LC&NRV inventory valuation rule. You have developed the following data relating to the ending inventory at December 31, 2020: Acquisition Cost Unit Total 3,180 $4.30 $13,674 10,269 1,630 6.30 7,230 2.80 3,330 7.30 20,244 24,309 $68,496 $ 32,300 197,000 229,300 68,496 Net Realizable Value $5.30 4.80 4.80 5.30 $293,000 160,804 132, 196 63,300 68,896 20,669 $ 48,227
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ISBN:
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