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3. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were excluded from the 2019 ending inventory.

3. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were excluded from the 2019 ending inventory.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Effect of the error # 3 for the year 2019

 

Answer the ff:

  O-Overstated U-Understated X-No effect
Purchases      
Cost of Sales      
Net income      
Inventory      
Accounts Payable      
RE before closing      
RE after closing      
You are examining the financial statements of DON JOHN CORPORATION which ends on December 31. DON JOHN CORP. uses the physical inventory system of accounting for inventory. During your examination, you discovered the errors below. 1. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were included in the 2019 ending inventory. 2. The inventory at December 31, 2019 is understated as a result of errors in physical count. 3. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were excluded from the 2019 ending inventory. 4. The inventory at December 31, 2019 is overstated as a result of the inclusion of goods acquired on consignment. 5. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were excluded from the 2019 ending inventory. 6. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were included in the 2019 ending inventory. Enter the effect of the errors in the solution guide below. Use the following symbols: O-Overstated, U-Understated X-No effect
Transcribed Image Text:You are examining the financial statements of DON JOHN CORPORATION which ends on December 31. DON JOHN CORP. uses the physical inventory system of accounting for inventory. During your examination, you discovered the errors below. 1. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were included in the 2019 ending inventory. 2. The inventory at December 31, 2019 is understated as a result of errors in physical count. 3. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were excluded from the 2019 ending inventory. 4. The inventory at December 31, 2019 is overstated as a result of the inclusion of goods acquired on consignment. 5. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were excluded from the 2019 ending inventory. 6. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were included in the 2019 ending inventory. Enter the effect of the errors in the solution guide below. Use the following symbols: O-Overstated, U-Understated X-No effect
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