Answered: 2 by reducing the reported ending…

2 by reducing the reported ending inventory in both Year 1 and Year 2 by $77,000. Which of the following statements is correct for Year 27

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: basis. On January 1 of Year 5, Ohio changed to dollar-value LIFO for external reporting and income…

A: LIFO (Last in first out) This method is based on the idea that the most recent purchases in your…

Q: ales eginning inventories ost of goods sold nding inventories Current Year $934,400 43,572 467,200…

A: The inventory turnover measures how efficiently a company uses its inventory by dividing the cost of…

Q: E7-5 (Algo) Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost…

A: FIFO is first in first out which means inventory bought first is sold first.LIFO is last in first…

Q: E7-8 (Algo) Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and…

A: The inventory can be valued using different methods as FIFO, LIFO and average method. The gross…

Q: The following data were extracted from the income statement of Keever Inc.: Current Year Previous…

A: Cost of goods sold The amount of inventory that is sold by a company is classified as cost of goods…

Q: Based on the following data for the current year, what is the number of days' sales in inventory?…

A: Inventory turnover ratio is a ratio which determines how efficiently and effectively the inventory…

Q: Orion Iron Corporation tracks the number of units purchased and sold throughout each year but…

A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: Required: 1-a. Compute cost of goods sold under the FIFO, LIFO, and average cost inventory costing…

Q: At the end of January of the current year, the records of Donner Company showed the following for a…

A: FIFO (First-In, First-Out) is a method of inventory management where the first items added are the…

Q: . What is the inventory turnover? (Do not round intermediate calculations and round your answer to 2…

A: Inventory Turnover: Inventory turnover refers to the number of times a firm is able to replace its…

Q: Exercise 5-12 Analysis of inventory errors LO A2 Vibrant Company had $1,090,000 of sales in each of…

A: The income statement explains the financial performance of the company for a particular period of…

Q: The Top Corporation has ending inventory of $719,973 and cost of goods sold for the year just ended…

A: Ending Inventory = $719,973Cost of Goods Sold = $9,935,413Since beginning inventory is not given, we…

Q: E7-5 (Algo) Calculating Ending Inventory and Cost of Goods Sold Under FIFO, LIFO, and Average Cost…

A: Lets understand the basics.Inventory and cost of goods sold can be calculated using,(1) FIFO(2)…

Q: Based on the following data for the current year, what is the number of days' sales in inventory?…

A: Days sales in inventory = 365/(cost of goods sold/Average inventory) Average inventory = (Opening…

Q: E7-12 (Algo) Reporting Inventory at Lower of Cost or Net Realizable Value LO7-4 H.T.Tan Company is…

A: Inventory includes all the items, merchandise, and raw materials that are used by the business…

Q: Nittany Company uses a periodic inventory system. At the end of the annual accounting period,…

A: FIFO :- FIRST IN FIRST OUT method in which good procured in earliest are sold . LIFO :- LAST IN…

Q: Use the follwing information for questions 14 and 15 The following information was available for…

A: The inventory turnover ratio is used to figure out, how efficiently the inventory is managed.

Q: What is the effect of a $40000 overstatement of last year's inventory on current years ending…

A: Retained earnings: Retained earnings are share holder funds. It is to be reported in Liabilities…

Q: Cost of goods sold for Abe Distributors was $550,330 for the year. If the beginning inventory at…

A: Ratio analysis is one of the important technique of management accounting. Under this, various…

Q: For each of the following independent scenarios, indicate the effect of the error (if any) on:

A: Step 1 Journal is the part of book keeping.

Q: P3,000,000, and the allowance for inventory writedown before At year-end, Julie Company reported…

A: Computation of the amount of loss on inventory writedown should be included in cost of goods sold is…

Q: 6. The Denver Company uses the gross profit method to estimate its inventory in interim financial…

A: Ending inventory remains unsold at the end of accounting period of the organisation.

Q: P6.3A (LO 2) Financial Statement Sekhon Company had a beginning inventory on January 1 of 160 units…

A: Inventory, based on its intended use and where it is in the manufacturing or distribution process.…

Q: The total value of ending inventory at the end of the quarter is: a. 1,140,000 b. 750,000 c.…

Q: Based on the following data for the current year, what is the inventory turnover (rounded to one…

A: Efficiency ratios are also known as activity ratios. It measures how well companies utilize their…

Q: 5. Recording and Reporting a LIFO Reserve At the end of the annual accounting period, the inventory…

A: Inventory, based on its intended use and where it is in the manufacturing or distribution process.…

Q: Assume that the total inventory on hand at the end of the year as determined by taking a physical…

A: Goods with the terms of FOB shipping point should not be included in the inventory till the goods…

Q: PA7-1 (Algo) Analyzing the Effects of Four Alternative Inventory Methods in a Periodic Inventory Sys…

A: Inventories are usually the largest part of the current asset. To ensure a smooth and proper flow of…

Q: ENDING INVENTORY, CURRENT YEAR Net Realizable Value (Market) at Year-End $ 15 Unit Cost When…

Q: 2. The company began its operation in 20X1. At the end of 20X1, the cost of inventory was…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: Courtney Company uses a periodic inventory system. The following data were available: beginning…

A: Under periodic inventory system, cost of goods sold is the balance amount after calculating the…

Q: Sandhill Inc. reported inventory at the beginning of the current year of $440000 and at the end of…

A: Inventory turnover = Cost of goods sold / Average inventory where, Average inventory = (Beginning…

Q: Which of the following is correct when, in the same year, beginning inventory is overstated by…

A: The net income is calculated as difference between sales and total costs. Gross profit = Sales -…

Q: On January 1 of Year 5, Benn Company changed from FIFO to LIFO for income tax and external reporting…

A: Answer:- Dollar value LIFO method:- The last-in-first layering model is different from this…

Q: One hundred units of inventory on hand at the end of the year are recorded at their cost of $10 each…

A: LIFO Method : Under LIFO method the goods which comes last are sold first. Inventory in hand : 100…

Q: Between FIFO or LIFO, which method would result in the lower income tax expense? Assume a ur answer…

A: In FIFO method , the units that are purchased first ,are sold first.In LIFO method , the units that…

Q: Dollar-value LIFO method. Part A. Marshall Fields Company has a beginning inventory in year one of…

A: Dollar-value LIFO Method:Doller value LIFO method is an accounting method for inventory of business…

Q: Orion Iron Corporation tracks the number of units purchased and sold throughout each year but…

A: The inventory can be valued using various methods as LIFO, FIFO and weighted average method. Under…

Q: Using the following data, by how much would taxable income change if LIFO is used rather than FIFO?…

A: Answer:- Taxable income meaning:- To put it succinctly, taxable income is the percentage of an…

Q: The following data were extracted from the income statement of Brecca Systems Inc.: Current Year…

A: Given:

Q: what is the number of days' sales in inventory

A: number of days' sales in inventory =(Ending Inventory/Cost of Goods Sold )X 365 days

Q: Mercury Company has only one inventory pool. On December 31, 2021, Mercury adopted the dollar-value…

A: The ending inventory is the inventory left in the business at year end. The inventory can be valued…

Q: was overstated by $25000 at the beginning of the year (this was not corrected). What is the…

A: Net profits will be underestimated if beginning inventory is overstated. To rectify this we need to…

Q: [The following information applies to the questions displayed below.] The income statement for…

A: Income statement is the part of financial statements which are prepared at the end of the accounting…

Q: 99,000

A: Dollar value LIFO method: This method is different model for the last-in first layering model. Under…

Q: S At the end of the year, Randy's Parts Company had the following items in inventory: Item P1…

A: The inventory is a balnce sheet item that is shown at cost, howevere the inventory may be presented…

Question

A company overstated its ending inventory in Year 1 by $77,000. The error was not discovered until Year 3. No errors
were made in Year 2. After finding the error in Year 3, management provides restated balance sheets for Year 1 and Year
2 by reducing the reported ending inventory in both Year 1 and Year 2 by $77,000. Which of the following statements is
correct for Year 2?
Multiple Choice
No adjustments to the amounts reported for inventory or retained earnings are needed in Year 2.
The amount reported for inventory in Year 2 needs to be increased by $77,000, and the amount
reported for retained earnings in Year 2 needs to be decreased by $77,000.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Multiple Choice

VIEW

Step 2: Explanation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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

An error understated Power Corporation’s December 31, 2018, ending inventory by$54,000. What effect will this error have on total assets and net income for 2018?Assets Net incomea. Understate Understateb. Understate No effectc. No effect Overstated. No effect No effect
E7-16 Dollar-Value LIFO A company adopted the LIFO method when its inventory was $1,800. One year later its ending inventory was $2,100, and costs had increased 5% during the year. Required: What is the ending inventory using dollar-value LIFO? Round to the nearest dollar.
(29) On December 31st, Datton, Inc. has cost of goods sold of $540,000. ending inventory is $100,000, beginning inventory is $128,000; and average accounts payable is $102,000. What is the accounts payable turnover? A. 8.53 B. 5.02 C. 3.06 D. 5.57
Sandhill Inc. reported inventory at the beginning of the current year of $320000 and at the end of the current year of $371000. If net sales for the current year are $4229200 and the corresponding cost of sales totaled $3126775, what is the inventory turnover for the current year?
1. 2. 3. E7-8 Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and Weighted Average Cost Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting di abru banon period, December 31. motor borliom goitebo voloval doidW CHAPTER 7 Inventory and Cost of Goods Sold LO 7-3 Transactions a. Inventory, Beginning Bib qulwollel silT mstave osm sibonaq 300 For the year:ensaxe b. Purchase, April 11 c. Purchase, June 1 (bibal Units moon! Jest Unit Cost $12 sqo :862 18 21iau 000,00 (2E2 sa alinu 0001 nomovar gai Edmosse uus lasieyda rag-tolovni gnib 900 02,102 x 100 POE in amoani 800 vs bnser2 13 15 300 600 d. Sale, May 1 (sold for $40 per unit) e. Sale, July 3 (sold for $40 per unit) f. Operating expenses (excluding income tax…
How much is the Input VAT? (Excluding Transitional Input VAT) RTT opt to register to VAT on its 3rd year of operation Beginning Inventory (including vat of 5,005) Sales (VAT inc) 250,000.00 4,200,000.00 Purchases (VAT Exc) 2,500,000.00 250,000 300,000 223,214.28 O Other:
E7-16 (Supplement 7A) Calculating Cost of Ending Inventory and Cost of Goods Sold under Perpetual FIFO and LIFO (LO 7-51) Orlon Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method ols perpetually at the time of each sale, as if it uses perpetual inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Unit Cost $10 Units Transactions e. Inventory, Beginning For the yeari b. Purchase, April 11 C. Purchase, June 1 d. Sale, May 1 (sold for $38 per unit) e. Sale, July ) (sold for $38 per unit) f. Operating expenses (excluding incone tax expense), $19,300 300 700 8 600 11 300 550 Required: Calculate the cost of ending inventory and the cost of goods sold using the FIFO and LIFO methods. FIFO LIFO Cost of Ending Inventory Cost of Goods Sold
E7-7 Analyzing and Interpreting the Financial Statement Effects of FIFO, LIFO, and Weighted Average Cost [LO 7-3] Scoresby Inc. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31. Transactions Units Unit Cost a. Inventory, Beginning 1,500 $ 28 For the year: b. Purchase, March 5 7,500 29 c. Purchase, September 19 3,500 31 d. Sale, April 15 (sold for $73 per unit) 2,200 e. Sale, October 31 (sold for $76 per unit) 6,500 f. Operating expenses (excluding income tax expense), $398,000 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. Compute the cost of ending inventory and…
On August 31, 2010, Harvey Co. decided to change from the FIFO periodic inventory system to the weightedaverage periodic inventory system. Harvey is on a calendar year basis. The cumulative effect of the change is determineda. As of January 1, 2010.b. As of August 31, 2010. c. During the eight months ending August 31, 2010, by a weighted-average of the purchases.d. During 2010 by a weighted-average of the purchases.
! Required information E7-11 (Static) Evaluating the Choice among Three Alternative Inventory Methods Based on Income and Cash Flow Effects LO7-2, 7-3 [The following information applies to the questions displayed below.] Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending inventory December 31, prior year), 2,000 units at $38; purchases, 8,000 units at $40; expenses (excluding income taxes), $184,500; ending inventory per physical count at December 31, current year, 1,800 units; sales, 8,200 units; sales price per unit, $75; and average income tax rate, 30 percent. E7-11 Part 3 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (b) income taxes paid (cash flow), assuming that prices were falling? Net income Income taxes paid (cash flow)
BE6-10 Johal Company counted and recorded its ending inventory as at December 31, 2002, incor- rectly, understating its correct value by $25,000. Assuming that this misstatement was not discov- ered and corrected, what is the impact of this error on assets, liabilities, and owner's equity at the end of 2002? At the end of 2003? rket data at December 31:
10. The Kansas Company provided the following data for its December 31, 2020, inventory maintained on the retail basis. At Cost At Retail Beginning inventory Purchases $120,000 $224,000 280,000 396,000 20,000 Markups (net) Markdowns (net) Sales (40,000) 520,000 What is the estimated inventory at December 31, 2020, valued at lower of average cost or market? a. $53,333 b. $75,000 c. $56,000 d. $50,000