In 2021, the internal auditors of Development Technologies, Inc., discovered that a $4 million purchase of merchandise in 2021 was recorded in 2020 instead. The physical inventory count at the end of 2020 was correct. Assume the company uses a periodic inventory system. Required: Prepare the journal entry needed in 2021 to correct the error. (Ignore income taxes.) (Enter your answers in millions (i.e., 5,000,000 should be entered as 5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

In 2021, the internal auditors of Development Technologies, Inc., discovered that a $4 million purchase of merchandise in 2021 was recorded in 2020 instead. The physical inventory count at the end of 2020 was correct. Assume the company uses a periodic inventory system. Required: Prepare the journal entry needed in 2021 to correct the error. (Ignore income taxes.) (Enter your answers in millions (i.e., 5,000,000 should be entered as 5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 11RE: At the end of 2019, Manny Company recorded its ending inventory at 350,000 based on a physical...

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At the end of 2019, Manny Company recorded its ending inventory at 350,000 based on a physical count. During 2020, the company discovered that the correct inventory value at the end of 2019 should have been 400,000 because it made a counting error. Upon discovery of this error in 2020, what correcting journal entry will Manny make? Ignore income taxes.
Borys Companys periodic inventory at December 31, 2019, is understated by 10,000, but purchases are correct. Johnson correctly values its 2020 ending inventory. What is the effect of this error on Boryss 2019 and 2020 financial statements?
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