Shockley Co. reported the following amounts in its financial statements: (a) Cost of goods sold (b) Profit (c) Total current assets (d) Equity In making the physical counts of inventory, the following errors were made: • Inventory on December 31, 2020: understated $80,000 • Inventory on December 31, 2021: overstated $22,000 Required: For each of the preceding financial statement items-(a), (b), (c), and (d)-prepare a schedule similar to the following and show the adjustments that would have been necessary to correct the reported amounts. (Negative answers should be indicated by a min sign.) a. Cost of goods sold: Reported Adjustments: Dec. 31, 2020 error Dec. 31, 2021 error Corrected b. Profit: Reported Adiustments: Dec. 31. 2020 error $ $ Financial Statements for Year Ended December 31. 2022 2020 2021 $ 765,000 $ 897,000 $ 820,000 270,000 325,000 281,000 1,255,000 1,365,000 1,200,000 1,387,000 1,530,000 1,332,000 $ 2020 765,000 $ (80,000) 2021 270,000 $ 80.000 685,000 $ 999,000 $ 897,000 $ 820,000 80,000 22,000 2022 325,000 $ (80.000) (22,000) 798,000 281,000 Numbers

Shockley Co. reported the following amounts in its financial statements: (a) Cost of goods sold (b) Profit (c) Total current assets (d) Equity In making the physical counts of inventory, the following errors were made: • Inventory on December 31, 2020: understated $80,000 • Inventory on December 31, 2021: overstated $22,000 Required: For each of the preceding financial statement items-(a), (b), (c), and (d)-prepare a schedule similar to the following and show the adjustments that would have been necessary to correct the reported amounts. (Negative answers should be indicated by a min sign.) a. Cost of goods sold: Reported Adjustments: Dec. 31, 2020 error Dec. 31, 2021 error Corrected b. Profit: Reported Adiustments: Dec. 31. 2020 error $ $ Financial Statements for Year Ended December 31. 2022 2020 2021 $ 765,000 $ 897,000 $ 820,000 270,000 325,000 281,000 1,255,000 1,365,000 1,200,000 1,387,000 1,530,000 1,332,000 $ 2020 765,000 $ (80,000) 2021 270,000 $ 80.000 685,000 $ 999,000 $ 897,000 $ 820,000 80,000 22,000 2022 325,000 $ (80.000) (22,000) 798,000 281,000 Numbers

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lumen INC. is preparing its 2020 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions. 1. P3 ,500 shipments of goods to a customer on December 31, terms FOB destination, was not included in the year-end inventory. The goods cost P2,600 and were delivered to the customer on January 8, 2021. The sale was properly recorded in 2021. Which of the following statements is true? a. There is no effect on the 2020 ending inventory. b. The 2020 ending inventory is overstated. c. The 2020 ending inventory is understated.
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Oriole Company understated its 2021 ending inventory by $30,300. Determine the impact this error has on ending inventory, cost of goods sold, and owner's equity in 2021 and 2022.
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The condensed Income statement of Chris Co. for the year ended December 31 , 2021 presented below: Chris Co. Income Statement For the Year Ended December 31, 2021 Sales 1,000,000 Cost of goods sold 600,000 400,000 Gross income Operating expenses 150,000 250,000 Net income An examination of the company records shows the following errors must be corrected : • December 31 , 2021 inventory is understated by: P31,000. Accrued expenses of P4,000 and prepaid expenses of P6,000 were not recognized in the company's books . The company employs the expense method in accounting for prepayments. • Sales of P5,000 were not recorded until January 2022 , although the goods were shipped in December 31, 2021, and were excluded from the December 31 physical inventory. Purchases of P30,000 made in December 31 , 2021, were not recorded although the goods were received and properly included in the December 31, physical inventory. A machine was sold for P10,000 on July 1 2021, and the proceeds were credited…