FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:1. The year-end cutoff of sales transactions:
WXY Technology Inc. left the salesljourmal open after year-end for two extra days and included
January 1 and 2nd 2021 sales in the December 31*, 2020 totals. The company uses a perpetual
inventory system. (COGS & Inventory entries required) What effect would this have on the 2020
financial statements?
WXY has the following balances on book as of December 29, 2020:
Cash:
$30,000
$14,500
• Inventory:
• Sales: $40,000
• Accounts Receivable: $15,200
• Cost of Goods Sold:
$13,000
January 1*, 2021 sale = $4,500, COGS = $2,300
January 2nd, 2021 sale = $3,700, COGS = $950
2020 Journal Entries
item#
Date
GLAccount
Dr.
Cr.
1
12/30/2020
Accounts Receivable
$1,000.00
Sales
$1,000.00
2
12/30/2020
Cost of Goods Sold
S-500.00
Inventory
S600.00
3
12/30/2020
Cash
$4,000.00
Accounts Receivable
$4,000.00
4
12/31/2020
Accounts Receivable
$2,000.00
Sales
$2,000.00
5
12/31/2020
Cost of Goods Sold
$1,300.00
Inventory
$1,300.00
6
12/31/2020
Cash
$3,000.00
Accounts Receivable
$3,000.00
12/31/2020
Accounts Receivable
$4,500.00
Sales
$4,500.00
8
12/31/2020
Cost of Goods Sold
$2,300.00
Inventory
$2,300.00
9
12/31/2020
Accounts Receivable
$3,700.00
Sales
$3,700.00
10
12/31/2020
Cost of Goods Sold
S050.00
Inventory
도950.00
Transcribed Image Text:Use T-Account to show and calculate:
a) Balance for each account as WXY recorded at year end Dec. 31, 2020.
b) Identify the incorrect JE
c) Show Corrected Balance for each account, plus Gross Profit.
d) Determine the overstatements and/or understatements that would result from the
error, include Gross Profit.
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