1. What effect did this error have on the combined pretax income of the two quarters?> 2. Which quarter's or quarters' (if any) EPS amounts were affected by this error? 3. Prepare corrected income statements for each quarter.
1. What effect did this error have on the combined pretax income of the two quarters?> 2. Which quarter's or quarters' (if any) EPS amounts were affected by this error? 3. Prepare corrected income statements for each quarter.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
27.
Subject :- Accounting
![Required 1
and 2
Prepare corrected income statements for each quarter.
Required 3 Required 4
Cost of goods sold:
Goods available for sale
Cost of goods sold
Required 1
and 2
Beginning inventory
Ending inventory
Cost of goods sold
Gross profit
Pretax income
First Quarter
Incorrect
$ 4,000 $ 4,000
Correct
First Quarter
0
< Required 1 and 2
Required 3 Required 4
Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement.
Error
< Required 3
Incorrect
Second Quarter
9,000
Correct
0
Required 4 >
Second Quarter
9,000
Required 4 >
Error](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7b6ce77-7d1f-42c7-90fc-6e082dc1db1b%2Fb4afea0b-627f-4b81-94a4-8c4a4de0080f%2Fxggolf_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required 1
and 2
Prepare corrected income statements for each quarter.
Required 3 Required 4
Cost of goods sold:
Goods available for sale
Cost of goods sold
Required 1
and 2
Beginning inventory
Ending inventory
Cost of goods sold
Gross profit
Pretax income
First Quarter
Incorrect
$ 4,000 $ 4,000
Correct
First Quarter
0
< Required 1 and 2
Required 3 Required 4
Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement.
Error
< Required 3
Incorrect
Second Quarter
9,000
Correct
0
Required 4 >
Second Quarter
9,000
Required 4 >
Error
![E7-15 (Static) Analyzing and Interpreting the Impact of an Inventory Error LO7-5
Grants Corporation prepared the following two income statements (simplified for illustrative purposes):
Sales revenue
Cost of goods sold
Beginning inventory
Purchases
Goods available for sale
Ending inventory
Cost of goods sold
Gross profit
Expenses
Pretax income
First Quarter
Required 1
and 2
$ 4,000
3,000
7,000
3,800
$ 11,000
Required 3
3,200
7,800
5,000
$ 2,800
Second Quarter
$ 3,800
13,000
16,800
9,000
During the third quarter, it was discovered that the ending inventory for the first quarter should have been $4,400.
Required:
1. What effect did this error have on the combined pretax income of the two quarters?>
2. Which quarter's or quarters' (if any) EPS amounts were affected by this error?
3. Prepare corrected income statements for each quarter.
4. Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statemen
Required 4
1. Effect on combined pretax income
2. Quarter(s)
$ 18,000
7,800
10,200
6,000
$ 4,200
1. What effect did this error have on the combined pretax income of th
2. Which quarter's or quarters' (if any) EPS amounts were affected by
Required 1 and 2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7b6ce77-7d1f-42c7-90fc-6e082dc1db1b%2Fb4afea0b-627f-4b81-94a4-8c4a4de0080f%2Fz3gc7eu_processed.jpeg&w=3840&q=75)
Transcribed Image Text:E7-15 (Static) Analyzing and Interpreting the Impact of an Inventory Error LO7-5
Grants Corporation prepared the following two income statements (simplified for illustrative purposes):
Sales revenue
Cost of goods sold
Beginning inventory
Purchases
Goods available for sale
Ending inventory
Cost of goods sold
Gross profit
Expenses
Pretax income
First Quarter
Required 1
and 2
$ 4,000
3,000
7,000
3,800
$ 11,000
Required 3
3,200
7,800
5,000
$ 2,800
Second Quarter
$ 3,800
13,000
16,800
9,000
During the third quarter, it was discovered that the ending inventory for the first quarter should have been $4,400.
Required:
1. What effect did this error have on the combined pretax income of the two quarters?>
2. Which quarter's or quarters' (if any) EPS amounts were affected by this error?
3. Prepare corrected income statements for each quarter.
4. Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statemen
Required 4
1. Effect on combined pretax income
2. Quarter(s)
$ 18,000
7,800
10,200
6,000
$ 4,200
1. What effect did this error have on the combined pretax income of th
2. Which quarter's or quarters' (if any) EPS amounts were affected by
Required 1 and 2
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