192 AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows: 2026 2025 Ending inventory $12,000 overstated $25,000 overstated What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much? Cost of goods sold Income before taxes Retained earnings What will be the impact on the 2026 financial statements? Will these items be overstated or understated as compared to actual results? By how much? Cost of goods sold Income before taxes Retained earnings What will happen when AM Beauty ultimately corrects its physical inventory count?

192 AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows: 2026 2025 Ending inventory $12,000 overstated $25,000 overstated What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much? Cost of goods sold Income before taxes Retained earnings What will be the impact on the 2026 financial statements? Will these items be overstated or understated as compared to actual results? By how much? Cost of goods sold Income before taxes Retained earnings What will happen when AM Beauty ultimately corrects its physical inventory count?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 14PA: Assuming a companys year-end inventory were overstated by $5,000, indicate the effect...

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Company Elmira 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 32,000. 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?
Assuming a companys year-end inventory were overstated by $5,000, indicate the effect (overstated/understated/no effect) of the error on the following balance sheet and income statement accounts. A. Income Statement: Cost of Goods Sold B. Income Statement: Net Income C. Balance Sheet: Assets D. Balance Sheet: Liabilities E. Balance Sheet: Equity
A company's correct ending balance for the inventory account at the end of 2021 should be $5,000, but the company incorrectly stated it as $3,000. In 2022, the company correctly recorded its ending balance of the inventory account. Which one of the following is true? O Cost of goods sold is understated by $2.000 in 2021. O Retained earnings are overstated by $2,000 in 2022. O Gross profit is overstated by $2.000 in 2021. O Gross profit is overstated by $2,000 in 2022. O More than one of the answers above are correct
AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows: 2026 2025 Ending inventory $12,000 overstated $25,000 overstated What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much? a. Cost of goods sold b. Income before taxes c. Retained earnings
Harvey Inc. is a calendar corporation. Its financial statements for the years 2021 and 2022 contained errors as follows: Year 2022 Year 2021 Inventory at year end 10,000 understated 30,000 overstated Depreciation expense 8,000 understated 25,000 overstated QUESTION: Assume that the proper correcting entries were made at December 31, 2021. By how much will 2022 income before income taxes be overstated or understated? ["", "", "", ""] Assume that no correcting entries were made at December 31, 2021. Ignoring income taxes, by how much will retained earnings at December 31, 2022 be overstated or understated? ["", "", "", ""] Assume that no correcting entries were made at December 31, 2021 or December 31, 2022, and that no additional errors occurred in 2023. Ignoring income taxes, by how much will working capital at December 31, 2023 be overstated or understated?
XYZ Corp. is a calendar-year corporation whose financial statements for 2019 and 2020 included errors as follows: Ending Inventory. Year Depreciation Expense 2019 30,000 overstated $36,000 overstated O a. $4,000 decrease O b. $32,000 increase 12,000 understated Time left 2:51:11 $ 2020 10,000 understated Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2019 or December 31, 2020. Ignoring income taxes, by how much should XYZ's retained earnings be retrospectively adjusted at January 1, 2021?
Two or more items are omitted in each of the following tabulations of income statement data. Fill in the amounts that are missing. 2019 2020 2021 Sales revenue $290,000 $ ? $410,000Sales returns and allowances11,00013,000? Net sales? 347,000? Beginning inventory20,00032,000? Ending inventory? ? ? Purchases? 260,000298,000Purchase returns and allowances5,0008,00010,000Freight-in8,0009,00012,000Cost of goods sold233,000? 293,000Gross profit on sales46,00091,00097,000
Dr. Drake Ramoray is a calendar-year corporation whose financial statements for 2020 and 2021 included errors as follows: Year Ending Inventory Sales Revenue 2020 $40,000 understated $25,000 understated 2021 24,000 understated 37,000 understated Assume that purchases were recorded correctly and that have been no correcting entries made to either 2020, or 2021. It is now January 1, 2022, and suppose the books are closed for 2020, but not 2021. Ignoring income taxes, by how much should Drake directly adjust retained earnings in their correcting journal entry? O $15,000 decrease O $38,000 decrease $15,000 increase O $65,000 increase O $86,000 increase O $126,000 decrease O None of the given answers O $38,000 increase O $126,000 increase O $9,000 increase
1. What is the total effect of the errors on the 2020 net income? a. Overstated by P80,400b. Understated by P775,800c. none of the choicesd. Understated by P1,236,600e. Overstated by P165,000 2. What is the total effect of the errors on the balance of the company's retained earnings at December 31. 20217 a. Understated by P155,100b. none of the choicesc. Understated by P265,800d. Overstated by P930,900e. Overstated by P885,900
During 2024, Lipe and Lipe Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: understated by $ 120,000 overstated by 150,000 Lipe and Lipe uses the periodic inventory system and the FIFO cost method. 2022 2023 Required: 1-a. Determine the effect of 2022 errors on retained earnings at January 1, 2024, before any adjustments. (Ignore income taxes.) 1-b. Determine the effect of 2023 errors on retained earnings at January 1, 2024, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the error in 2024. 3. Will Lipe and Lipe account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Req 18 Determine the effect of 2022 errors on retained earnings at January 1, 2024, before any adjustments. (Ignore income taxes.) Note: If the answers is no effect then select "No effect" in the dropdown. Req 1A 2022 Beginning…
Bol Company's December 31 year-end financial statements had the following errors: December 31, 2020 December 31, 2021 Prepaid insurance 16,000 understated Unearned rental 10,000 understated Depreciation expense 7,200 understated Ending inventory 27,000 understated 39,600 overstated There were no other errors during the year 2020 or 2021 and no corrections have been made for any of the errors. (Ignore income tax considerations) 1. What is the net effect of the errors on Bols 2021 net income? 2. What is the net effect of the errors in Bols December 31, 2021 retained earnings? 3. What is the net effect of the errors in Bol's December 31, 2021 working capital (current assets less current liabilities)?
19. Fuschia Company is a calendar year corporation. Its financial statements for the years 2018 and 2017 contained errors as follows: 2017 P400,000 understated 200,000 overstated 350,000 overstated 2018 Ending inventory Depreciation expense 500,000 understated Rent income Unearned rent income 350,000 understated P300,000 overstated Assume that no correcting entries were made at December 31, 2017. By how much will 2018 profit before income taxes be overstated because of the foregoing errors? A. P850,000 B. P800,000 C. P750,000 D. P250,000 20. Assume that no correcting entries were made in both 2017 and 2018. For how much was the retained earnings understated or overstated as of December 31, 2018? A. P600,000 overstated B. P800,000 overstated C. P1,050,000 overstated D. P200,000 understated