Accounting (Text Only)
26th Edition
ISBN: 9781285743615
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 7, Problem 7.18EX
(a)
To determine
Inventory error:
Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the
To indicate: the effect of misstatement on FM shop in their balance sheet.
(b)
To determine
To indicate: the effect of misstatement on FM shop in their income statement.
(c)
To determine
To indicate: the effect on FM shop in their income statement on the next year if the mistake is uncorrected.
(d)
To determine
To indicate: the effect on FM shop in their balance sheet on the next year if the mistake is uncorrected.
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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
$445,740 instead of the correct amount of $427,910.
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
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31, 20Y8.
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Gross Profit
Net Income
Overstated/Understated
Amount
c. If uncorrected, what would be the effect of the error on the 20Y9 income statement?
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Amount
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Gross Profit
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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 $199,630 instead of the correct amount of $191,640.
Enter all amounts as positive numbers.
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Effect of Errors in Physical Inventory
Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2012, Missouri River Supply incorrectly counted its inventory as $437,030 instead of the correct
amount of $450,140.
Enter all amounts as positive numbers.
a. State the effect of the error on the December 31, 2012, balance sheet of Missouri River Supply.
Balance Sheet Items
Understated/Overstated
Amount
Merchandise Inventory
Current Assets
Total Assets
Owner's Equity
b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 20Y2.
Income Statement Items
Cost of Merchandise Sold
Gross Profit
Net Income
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Amount
c. If uncorrected, what would be the effect of the error on the 20Y3 income statement?
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Chapter 7 Solutions
Accounting (Text Only)
Ch. 7 - Prob. 1DQCh. 7 - Why is it important to take a physical inventory...Ch. 7 - Do the terms FIFO, LIFO, and weighted average...Ch. 7 - If merchandise inventory is being valued at cost...Ch. 7 - Which of the three methods of inventory...Ch. 7 - If inventory is being valued at cost and the price...Ch. 7 - Using the following data, how should the...Ch. 7 - The inventory at the end of the year was...Ch. 7 - Hutch Co. sold merchandise to Bibbins Company on...Ch. 7 - A manufacturer shipped merchandise to a retailer...
Ch. 7 - Cost flow methods The following three identical...Ch. 7 - Cost flow methods The following three identical...Ch. 7 - Perpetual inventory using FIFO Beginning...Ch. 7 - Perpetual inventory using FIFO Beginning...Ch. 7 - Perpetual inventory using LIFO Beginning...Ch. 7 - Perpetual inventory using LIFO Beginning...Ch. 7 - Perpetual inventory using weighted average...Ch. 7 - Perpetual inventory using weighted average...Ch. 7 - Periodic inventory using FIFO, LIFO, and weighted...Ch. 7 - Periodic inventory using FIFO, LIFO, and weighted...Ch. 7 - Lower-of-cost-or-market method On the basis of the...Ch. 7 - Prob. 7.6BPECh. 7 - Prob. 7.7APECh. 7 - Prob. 7.7BPECh. 7 - Prob. 7.8APECh. 7 - Prob. 7.8BPECh. 7 - Control of inventories Triple Creek Hardware Store...Ch. 7 - Control of inventories Hardcase Luggage Shop is a...Ch. 7 - Perpetual inventory using FIFO Beginning...Ch. 7 - Perpetual inventory using LIFO Assume that the...Ch. 7 - Perpetual inventory using LIFO Beginning...Ch. 7 - Perpetual inventory using FIFO Assume that the...Ch. 7 - FIFO and LIFO costs under perpetual inventory...Ch. 7 - Weighted average cost flow method under perpetual...Ch. 7 - Weighted average cost flow method under perpetual...Ch. 7 - Perpetual inventory using FIFO Assume that the...Ch. 7 - Perpetual inventory using LIFO Assume that the...Ch. 7 - Prob. 7.12EXCh. 7 - Periodic inventory by three methods; cost of...Ch. 7 - Comparing inventory methods Assume that a firm...Ch. 7 - Lower-of-cost-or-market inventory On the basis of...Ch. 7 - Merchandise inventory on the balance sheet Based...Ch. 7 - Prob. 7.17EXCh. 7 - Prob. 7.18EXCh. 7 - Error in inventory During 2016, the accountant...Ch. 7 - Inventory turnover The following data (in...Ch. 7 - Inventory turnover and number of days' sales in...Ch. 7 - Retail method A business using the retail method...Ch. 7 - Retail method A business using the retail method...Ch. 7 - Retail method A business using the retail method...Ch. 7 - Retail method On the basis of the following data,...Ch. 7 - Gross profit method The merchandise inventory was...Ch. 7 - Gross profit method Based on the following data,...Ch. 7 - Gross profit method Based on the following data,...Ch. 7 - FIFO perpetual inventory The beginning inventory...Ch. 7 - LIFO perpetual inventory The beginning inventory...Ch. 7 - Weighted average cost method with perpetual...Ch. 7 - Prob. 7.4APRCh. 7 - Prob. 7.5APRCh. 7 - Lower-of-cost-or-market inventory Data on the...Ch. 7 - Retail method; gross profit method Selected data...Ch. 7 - FIFO perpetual inventory The beginning inventory...Ch. 7 - LIFO perpetual inventory The beginning inventory...Ch. 7 - Weighted average cost method with perpetual...Ch. 7 - Periodic inventory by three methods The beginning...Ch. 7 - Periodic inventory by three methods Pappas...Ch. 7 - Lower-of-cost-or-market inventory Data on the...Ch. 7 - Retail method; gross profit method Selected data...Ch. 7 - Prob. 7.1CPCh. 7 - LIFO and inventory flows The following is an...Ch. 7 - Costing inventory Golden Eagle Company began...Ch. 7 - Inventory ratios for Dell and HP Dell Inc. and...Ch. 7 - Comparing inventory ratios for two companies...Ch. 7 - Prob. 7.6CP
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