Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 6, Problem 7QC
At December 31, 2018, Stevenson Company overstated ending inventory by $36,000. How does this error affect cost of goods sold and net income for 2018?
Learning Objective 5
- Overstates cost of goods sold and understates net income
- Understates cost of goods sold and overstates net income
- Leaves both cost of goods sold and net income correct because the errors cancel each other
- Overstates both cost of goods sold and net income
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Get Answer please without AI tool
Do not Plagrized the answer and not provide answer in image
Thank you
If ending inventory is understaffed for year 1, then in year 2….
A. Costa of goods sold and gross profit will both be overstated
B. Costs of goods sold and gross profit will be understated
C. Costs of goods sold will be overstated and gross profit will be understated
D. Costs of food sold will be understated and gross profit will be overstated
Chapter 6 Solutions
Horngren's Accounting (12th Edition)
Ch. 6 - Which principle or concept states that business...Ch. 6 - Which inventory costing method assigns to ending...Ch. 6 - Assume Nile.com began April with 14 units of...Ch. 6 - Suppose Nile.com used the weighted-average...Ch. 6 - Which inventory costing method results in the...Ch. 6 - Which of the following is most closely linked to...Ch. 6 - At December 31, 2018, Stevenson Company overstated...Ch. 6 - Suppose Maestro’s had cost of goods sold during...Ch. 6 - Suppose used the LIFO inventory costing method and...Ch. 6 - Prob. 1RQ
Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Discuss some measures that should be taken to...Ch. 6 - Under a perpetual inventory system, what are the...Ch. 6 - When using a perpetual inventory system and the...Ch. 6 - During periods of rising costs, which inventory...Ch. 6 - What does the lower-of-cost-or market (LCM) rule...Ch. 6 - What account is debited when recording the...Ch. 6 - What is the effect on cost of goods sold, gross...Ch. 6 - When does an inventory error cancel out, and why?Ch. 6 - How is inventory turnover calculated, and what it...Ch. 6 - How is days’ sales inventory calculated, and what...Ch. 6 - When using the periodic inventory system, which...Ch. 6 - When using periodic inventory system and...Ch. 6 - Determining inventory accounting principles...Ch. 6 - Determining inventory costing methods Learning...Ch. 6 - Preparing a perpetual Inventory record and journal...Ch. 6 - Preparing a perpetual inventor, record and journal...Ch. 6 - Preparing a perpetual inventor record and journal...Ch. 6 - Preparing a perpetual inventory record and journal...Ch. 6 - Comparing Cost of Goods Sold under FIFO, LIFO, and...Ch. 6 - Applying the lower-of-cost-or-market rule Learning...Ch. 6 - Determining the effect of an inventory error...Ch. 6 - Computing the rate of inventory turnover and days’...Ch. 6 - Computing periodic inventory amounts—FIFO Learning...Ch. 6 - Computing periodic inventory amounts—LIFO Learning...Ch. 6 - Computing periodic inventory...Ch. 6 - Using accounting vocabulary Learning Objective 1,...Ch. 6 - Comparing inventory methods Learning Objective 2...Ch. 6 - Measuring and journalizing merchandise inventory...Ch. 6 - Measuring and journalizing merchandise inventory...Ch. 6 - Measuring ending inventory and cost of goods sold...Ch. 6 - Comparing amounts for cost of goods sold, ending...Ch. 6 - Comparing cost of goods sold and gross...Ch. 6 - Applying the lower-of-cost-or-market rule to...Ch. 6 - Applying the lower-of-cost-or-market rule to...Ch. 6 - Measuring the effect of an inventory error...Ch. 6 - Correcting an inventory error-two years Learning...Ch. 6 - Computing inventory turnover and days’ sales in...Ch. 6 - Comparing ending merchandise inventory, cost of...Ch. 6 - Computing periodic inventory amounts Learning...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting principles for inventory and applying...Ch. 6 - Prob. P6.31APGACh. 6 - Prob. P6A.32APGACh. 6 - Prob. P6.33BPGBCh. 6 - Prob. P6.34BPGBCh. 6 - Accounting principles for inventory and applying...Ch. 6 - Prob. P6.36BPGBCh. 6 - Prob. P6A.37BPGBCh. 6 - Prob. P6.38CTCh. 6 - Prob. P6.39CPCh. 6 - Prob. P6.40PSCh. 6 - Prob. 1CPCh. 6 - Prob. 2CPCh. 6 - Prob. 3CPCh. 6 - Prob. 4CPCh. 6 - Prob. 5CPCh. 6 - Prob. 6CPCh. 6 - Prob. 7CPCh. 6 - Prob. 8CPCh. 6 - Prob. 9CPCh. 6 - Prob. 10CPCh. 6 - Prob. 11CPCh. 6 - Prob. 6.1TIATCCh. 6 - Prob. 6.1DCCh. 6 - Prob. 6.1FSC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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?arrow_forwardBonita Company understated its 2022 ending inventory by $30,100. Determine the impact this error has on ending inventory, cost of goods sold, and owner’s equity in 2022 and 2023. 2022 2023 Ending inventory select an effect OverstatedNo EffectUnderstated select an effect UnderstatedOverstatedNo Effect Cost of goods sold select an effect OverstatedNo EffectUnderstated select an effect OverstatedUnderstatedNo Effect Owner’s equity select an effect No EffectOverstatedUnderstated select an effect UnderstatedOverstatedNo Effectarrow_forwardInstruction: Please use moving average in answering the questions (disregard FIFO)arrow_forward
- Given the following calculate the cost of ending inventory and goods sold using fifo.arrow_forwardPartial income statements for Sherwood Company summarized for a four-year period show the following: 2018 2019 2020 2021 $ 2,300,000 1,472,000 $ 2,700,000 1,701,000 $ 2,800,000 1,820,000 $ 3,300,000 2,112,000 Net Sales Cost of Goods Sold Gross Profit $ 828,000 $ 999,000 $ 980,000 $ 1,188,000 An audit revealed that in determining these amounts, the ending inventory for 2019 was overstated by $21,200. The inventory balance on December 31, 2020, was accurately stated. The company uses a periodic inventory system. Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error. 2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction. 2-b. Do the results lend confidence to your corrected amounts?arrow_forwardOriole 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.arrow_forward
- Please help me. Thankyou.arrow_forwardPlease do not give solution in image format thankuarrow_forwardAssuming 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: Equityarrow_forward
- Effects of an Error in Ending Inventory Waymire Company prepared the partial income statements presented below for 2019 and 2018. During 2020, Waymires accountant discovered that ending inventory for 2018 had been understated by $6,500. Required: 1. Prepare corrected income statements for 2019 and 2018. 2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item (ignore the effect of income taxes). Indicate whether each error is an overstatement (+) or an understatement (-).arrow_forwardLO1 If the ending inventory is overstated by 10,000, indicate what, if anything, is incorrect about the following: Cost of goods sold___________ Gross profit___________ Net income___________ Ending owners capital___________arrow_forwardClick to watch the Tell Me More Learning Objective 7 video and then answer the questions below. 1. The total units to be produced in a period is calculated as a. estimated units sold plus desired ending inventory less estimated beginning inventory b. estimated units sold less desired ending inventory add estimated beginning inventory c. estimated units sold plus desired ending inventory plus estimated beginning inventory d. estimated units sold less desired ending inventory less estimated beginning inventory b 2. Cost of goods sold is calculated as a. beginning finished goods inventory plus cost of goods manufactured less beginning finished goods inventory b. beginning finished goods inventory plus cost of goods manufactured plus beginning finished goods inventory c. beginning finished goods inventory less cost of goods manufactured less beginning finished goods inventory d. beginning finished goods inventory less cost of goods manufactured plus beginning finished goods inventory d…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Accounting Changes and Error Analysis: Intermediate Accounting Chapter 22; Author: Finally Learn;https://www.youtube.com/watch?v=c2uQdN53MV4;License: Standard Youtube License