1. The year-end cutoff of sales transactions: WXY Technology Inc. left the salesljournal open after year-end for two extra days and included January 1* and 2nd 2021 sales in the December 31", 2020 totals. The company uses a perpetual inventory system. (cOGS & Inventory entries required) What effect would this have on the 2020 financial statements? WXY has the following balances on book as of December 29", 2020: • Cash: • Inventory: Sales: $40,000 • Accounts Receivable: $15,200 • Cost of Goods Sold: $13,000 $30,000 $14,500 January 1", 2021 sale = $4,500, COGS = $2,300 2nd, 2021 sale = $3,700, COGS = $950 2020 Journal Entries GL Account Accounts Receivable item Date Dr. Cr. 12/30/2020 51,000.00 Sales $1,000.00 2 12/30/2020 Cost of Goods Sold S600.00 Inventory $600.00 12/30/2020 Cash 54,000.00 Accounts Receivable $4,000.00 4 12/31/2020 Accounts Receivable 52,000.00 Sales $2,000.00 12/31/2020 cost of Goods Sold $1,300.00 Inventory $1,300.00 12/31/2020 Cash $3,000.00 Accounts Receivable 53,000.00 12/31/2020 Accounts Receivable $4,500.00 Sales $4,500.00 12/31/2020 cost of Goods Sold 52,300.00 Inventory $2,300.00 12/31/2020 Accounts Receivable $5,700.00 Sales $3,700.00 10 12/31/2020 Cost of Goods sold S050.00 Inventory S050.00
1. The year-end cutoff of sales transactions: WXY Technology Inc. left the salesljournal open after year-end for two extra days and included January 1* and 2nd 2021 sales in the December 31", 2020 totals. The company uses a perpetual inventory system. (cOGS & Inventory entries required) What effect would this have on the 2020 financial statements? WXY has the following balances on book as of December 29", 2020: • Cash: • Inventory: Sales: $40,000 • Accounts Receivable: $15,200 • Cost of Goods Sold: $13,000 $30,000 $14,500 January 1", 2021 sale = $4,500, COGS = $2,300 2nd, 2021 sale = $3,700, COGS = $950 2020 Journal Entries GL Account Accounts Receivable item Date Dr. Cr. 12/30/2020 51,000.00 Sales $1,000.00 2 12/30/2020 Cost of Goods Sold S600.00 Inventory $600.00 12/30/2020 Cash 54,000.00 Accounts Receivable $4,000.00 4 12/31/2020 Accounts Receivable 52,000.00 Sales $2,000.00 12/31/2020 cost of Goods Sold $1,300.00 Inventory $1,300.00 12/31/2020 Cash $3,000.00 Accounts Receivable 53,000.00 12/31/2020 Accounts Receivable $4,500.00 Sales $4,500.00 12/31/2020 cost of Goods Sold 52,300.00 Inventory $2,300.00 12/31/2020 Accounts Receivable $5,700.00 Sales $3,700.00 10 12/31/2020 Cost of Goods sold S050.00 Inventory S050.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:1. The year-end cutoff of sales transactions:
WXY Technology Inc. left the salesljourmal open after year-end for two extra days and included
January 1 and 2nd 2021 sales in the December 31*, 2020 totals. The company uses a perpetual
inventory system. (COGS & Inventory entries required) What effect would this have on the 2020
financial statements?
WXY has the following balances on book as of December 29, 2020:
Cash:
$30,000
$14,500
• Inventory:
• Sales: $40,000
• Accounts Receivable: $15,200
• Cost of Goods Sold:
$13,000
January 1*, 2021 sale = $4,500, COGS = $2,300
January 2nd, 2021 sale = $3,700, COGS = $950
2020 Journal Entries
item#
Date
GLAccount
Dr.
Cr.
1
12/30/2020
Accounts Receivable
$1,000.00
Sales
$1,000.00
2
12/30/2020
Cost of Goods Sold
S-500.00
Inventory
S600.00
3
12/30/2020
Cash
$4,000.00
Accounts Receivable
$4,000.00
4
12/31/2020
Accounts Receivable
$2,000.00
Sales
$2,000.00
5
12/31/2020
Cost of Goods Sold
$1,300.00
Inventory
$1,300.00
6
12/31/2020
Cash
$3,000.00
Accounts Receivable
$3,000.00
12/31/2020
Accounts Receivable
$4,500.00
Sales
$4,500.00
8
12/31/2020
Cost of Goods Sold
$2,300.00
Inventory
$2,300.00
9
12/31/2020
Accounts Receivable
$3,700.00
Sales
$3,700.00
10
12/31/2020
Cost of Goods Sold
S050.00
Inventory
도950.00
Transcribed Image Text:Use T-Account to show and calculate:
a) Balance for each account as WXY recorded at year end Dec. 31, 2020.
b) Identify the incorrect JE
c) Show Corrected Balance for each account, plus Gross Profit.
d) Determine the overstatements and/or understatements that would result from the
error, include Gross Profit.
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