FINANCIAL ACCT.FUND.(LOOSELEAF)
7th Edition
ISBN: 9781260482867
Author: Wild
Publisher: MCG
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Chapter 4, Problem 12E
Impacts of inventory error on key accounts
A retailer completed a physical count of ending merchandise inventory. When counting inventory, employees did not include $3,000 of incoming goods shipped by a supplier on December 31 under FOB shipping point. These goods had been recorded in Merchandise Inventory, but they were not included in the physical count because they were in transit. This means shrinkage was incorrectly overstated by $3,000.
Compute the amount of overstatement or understatement for each of the following amounts for this period.
- Ending inventory
- Total assets
- Net income
- Total equity
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Inventory Errors
1. On December 31, ABC Company counted and recorded $500,000 of inventory. This count did not include $80,000 of goods in transit, shipped to ABC Company on December 29, FOB shipping point. ABC Company recorded the purchase correctly on December 29 when the goods were shipped.
A. Determine the correct December 31 inventory balance.
B. Identify any accounts that are in error, and state the amount and direction (overstatement or understatement) of the error.
Explain for each answer please, I don't understand.
Effect of Errors in Physical Inventory
Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 20Y8, Fonda Motorcycle Shop incorrectly counted its inventory as $157,760 instead of the correct amount of $151,450.
Enter all amounts as positive numbers.
a. State the effect of the error on the December 31, 20Y8, balance sheet of Fonda Motorcycle Shop.
Balance Sheet Items
Overstated/Understated
Amount
Merchandise Inventory
$
Current Assets
Total Assets
Owner's Equity
b. State the effect of the error on the income statement of Fonda Motorcycle Shop for the year ended December 31, 20Y8.
Income Statement Items
Overstated/Understated
Amount
Cost of Merchandise Sold
$
Gross Profit
Net Income
c. If uncorrected, what would be the effect of the error on the 20Y9 income statement?
Income Statement Items
Understated/Overstated
Amount
Cost of…
Chapter 4 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
Ch. 4 - Prob. 1MCQCh. 4 - A company purchased $4,500 of merchandise on May 1...Ch. 4 - Prob. 3MCQCh. 4 - Prob. 4MCQCh. 4 - Prob. 5MCQCh. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - Prob. 5DQ
Ch. 4 - Prob. 6DQCh. 4 - Prob. 7DQCh. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 10DQCh. 4 - Prob. 11DQCh. 4 - Prob. 12DQCh. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 1QSCh. 4 - Prob. 2QSCh. 4 - Prob. 3QSCh. 4 - Prob. 4QSCh. 4 - Prob. 5QSCh. 4 - Prob. 6QSCh. 4 - Prob. 7QSCh. 4 - Prob. 8QSCh. 4 - Prob. 9QSCh. 4 - Prob. 10QSCh. 4 - Prob. 11QSCh. 4 - Prob. 12QSCh. 4 - Prob. 13QSCh. 4 - Prob. 14QSCh. 4 - Prob. 15QSCh. 4 - Prob. 16QSCh. 4 - Prob. 17QSCh. 4 - Prob. 18QSCh. 4 - Prob. 19QSCh. 4 - Prob. 20QSCh. 4 - Prob. 21QSCh. 4 - Prob. 22QSCh. 4 - Prob. 23QSCh. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Computing net sales for multiple-step income...Ch. 4 - Impacts of inventory error on key accounts P3 A...Ch. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16ECh. 4 - Prob. 17ECh. 4 - Prob. 18ECh. 4 - Prob. 19ECh. 4 - Prob. 20ECh. 4 - Prob. 21ECh. 4 - Prob. 22ECh. 4 - Prob. 23ECh. 4 - Prob. 24ECh. 4 - Prob. 25ECh. 4 - Prob. 1PSACh. 4 - Preparing journal entries for merchandising...Ch. 4 - Prob. 3PSACh. 4 - Prob. 4PSACh. 4 - Prob. 5PSACh. 4 - Prob. 1PSBCh. 4 - Prob. 2PSBCh. 4 - Prob. 3PSBCh. 4 - Prob. 4PSBCh. 4 - Prob. 5PSBCh. 4 - Santana Rey created Business Solutions on October...Ch. 4 - Prob. 1GLPCh. 4 - Prob. 2GLPCh. 4 - Prob. 3GLPCh. 4 - Prob. 1AACh. 4 - Prob. 2AACh. 4 - Prob. 3AACh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Prob. 3BTNCh. 4 - Prob. 4BTNCh. 4 - Prob. 5BTNCh. 4 - Prob. 6BTN
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