uring year 3, Paul Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts: Year 1 - P 60,000 understated Year 2 - P 75,000 overstated Paul uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, Paul’s retained earnings at January 1, year 3, would be P 75,000 overstated P 135,000 overstated P 15,000 overstated

Q: The following information is presented for Bramble Corporation. The net income errors in ending…

A: Inventory management involves keeping track of the goods, components, and raw materials that a…

Q: During year 3, Paul Company discovered tha financial statements were incorrect by the fo

A: The amount which is left in the company after giving all costs and dividends to shareholders known…

Q: The draft accounts of Collister Co. for the year ended 31st Dec 2020 include  the following: Revenue…

A: Cost of goods sold = Beginning inventory + purchases - ending inventory Gross profit = Sales - COGS

Q: On December 31, 2021 Carla Vista Company changed its method of accounting for inventory from…

A: An increase in beginning inventory due to a change in the method of inventory decreases the profit.…

Q: During its first and second years of operations, Explorer Company, a corporation using a periodic…

A: Inventory is one of the current asset of the business, which is reported in the balance sheet of the…

Q: ay 31. The

A: We know that under the periodic inventory system inventory will be physically count at year end and…

Q: At 12/31/21, the end of Bell Company's first year of business, inventory was $158,800 and $157,900…

A: Lower of cost or net realisable value method record the inventory at lower of its cost or net…

Q: The following information is presented for Bramble Corporation. The net income figures were computed…

A: Understatement or overstatement of inventory directly impacts the amount of reported net income for…

Q: During 2024, Lipe and Lipe Corporation discovered that its ending inventories reported on its…

A: Req 1B:Determine the effect of 2023 errors on retained earnings at January 1, 2024, before any…

Q: ndi Khough Alam Corporation appropriately changed its inventory costing method from FIFO cost to…

A: Impact of change in the evaluating of Inventory from FIFO to Weighted Average.

Q: 2 by reducing the reported ending inventory in both Year 1 and Year 2 by $77,000. Which of the…

A: Option A is the correct answer

Q: Smart Company prepared its annual financial statements dated December 31. The company reported its…

A: Ending inventory on LCM basis is the sum of individual items on lower of cost or NRV…

Q: oing err

A: Errors can be of different types in accounting such as Error of ommission, error of commission,…

Q: Rockets Inc. changed from LIFO to the FIFO inventory costing method on January 1, 2021. Inventory…

A: LIFO is that inventory valuation method under which inventories which are purchased in last will be…

Q: 8. On December 31, 2020, ABC Company reported cost of goods sold of P750,000 and ending inventory of…

A: Given that on Dec 31, 2020: Cost of goods sold = P750,000 Ending inventory = P150,000

Q: r 31, 20X0 Inventory is overstated by $22,500 December 31, 20X1 Inventory is understated by $37,500…

A: Income statement for any particular year shows the amount of incomes and expenses incurred during…

Q: (a) Compute the total effect of the errors on 2021 net income.

A: Accounting errors occur at the time of recording data by accounting professionals. This does not…

Q: Marigold Inc. reported total assets of $2391000 and net income of $318000 for the current year.…

A: Beginning inventory is not reported on the balance. Beginning inventory is used for the calculate…

Q: n December 31, 2020, Zodiac Corporation appropriately changed its inventory costing method from FIFO…

A: Retained earning means the amount left in business after paying all expenses and dividend to…

Q: Platinum Co. failed to record $72,000 credit purchase of goods that were received on the last day of…

A: Lets understand the basics. When any error is made in recording any expenses and error discovered in…

Q: The income statement of TINKER CORP. shows a net income of P175,000 for the year ended December 31,…

A: Solution: Unadjusted net income for the year ended Dec 31, 2014 = Adjusted net income for 2014 -…

Q: On January 1 of Year 5, Benn Company changed from FIFO to LIFO for income tax and external reporting…

A: Answer:- Dollar value LIFO method:- The last-in-first layering  model is different from this…

Q: Galliger Corp.'s adjusted trial balance at December 31, 2023, included the following: Credit…

A: Note: Loss from discontinued division won't be considered for this calculation

Q: mber 31, 2021, Aries Corporation appropriately changed its inventory costing method from FIFO cost…

A: Basic Concept of Impact of change in Inventory Valuation

Q: The following errors were discovered in the preparation of the financial statements of Uni-Focus…

A: The correction entries are passed to correct the information in the books.

Q: was overstated by $25000 at the beginning of the year (this was not corrected). What is the…

A: Net profits will be underestimated if beginning inventory is overstated. To rectify this we need to…

Q: Assume that the prior period error effect is considered to be material.

A: Errors do happen while preparing financial statements. Some errors in financial statements can…

Q: During 2011, Paul discovered that the ending inventories reported on its financial statements were…

A: Inventories are very important part of accounting. Inventories set a base for any firm in various…

Q: 2020 20 nventory $6,000 overstated $16,000 e expense $4,000 understated $12,000 ny uses the periodic…

A: Solution: Understatement of income due to beginning inventory in 2020 = $16,000 Overstatement of…

Q: The following is an independent error made by a company that uses the periodic inventory system:…

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: Sheridan Inc. reported total assets of $2395000 and net income of $322000 for the current year.…

A: Ans. If the inventory at the beginning of the year is overstated then it results in understatement…

Q: BETA Company began operations in January 2021. Financial statements for the years ended December 31,…

A: Financial statements: Financial statements are the final reports of a company, prepared at the end…

Q: Taking Iventory At the end of the last fiscal period, er counted all merchandise on hand. How was…

A: Physical stock taking is done at the end of every accounting year. Under this process, each and…

Q: 2. What total amount should be reported as prior period error in the financial statements for the…

A: Prior Period Items are those items of Income and expense whose effect on financial statement are…

Q: At the beginning of the year Candle Co. has an inventory balance of $32,000. The company has net…

A: Errors in accounting mean incorrect preparation, presentation and reporting of the financial…

Q: Power Company's ending inventory is understated by P7,000. The effects of this error in the current…

A: Rectification of entry :—  When the error or mistakes is discovered then suddenly rectification…

Q: financial statement and income tax purposes, to make its reporting as reliable and more relevant. in…

A: Inventory, based on its intended use and where it is in the manufacturing or distribution process.…

Q: In 2022, matapat A. CO reported net inxom of P18,000. The correct net income was 25,000. It was…

A: Formula: Ending Inventory = Reported Net income - Correct Net income - Ending inventory overstated -…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.