Required information[The following information applies to the questions displayed below.]Luther has a bird shop that sells canaries. Luther maintains accurate records on the number of birds purchased from itssuppliers and the number sold to customers. The records show the following purchases and sales during 2024.DateJanuary 1April 14August 22October 29TransactionsBeginning inventoryPurchasePurchasePurchase(a) Ending inventory(b) Retained earnings(c) Cost of goods sold(d) Net incomeUnits Unit Cost2772122873082722025$32343638January 1 to December 31Sales ($52 each)Luther uses a periodic inventory system and believes there are 36 birds remaining in ending inventory. However, Lutherneglects to make a final inventory count at the end of the year. An employee accidentally left one of the cages open onenight and 10 birds flew away, leaving only 26 birds in ending inventory. Luther is not aware of the lost canaries.Total Cost$8642,4484,3923,306$11,0104. Assuming that ending inventory is correctly counted at the end of 2025, what effect will the inventory error in 2024 have onreported amounts for (a) ending inventory, (b) retained earnings, (c) cost of goods sold, and (d) net income (ignoring tax effects) in2025?

If we understate the beginning inventory or overstate the closing inventory then the cost of goods…

4. Assuming that ending inventory is correctly counted at the end of 2025, what effect will the inventory error in 2024 have on reported amounts for (a) ending inventory, (b) retained earnings, (c) cost of goods sold, and (d) net income (ignoring tax effects) in 2025? (a) Ending inventory (b) Retained earnings (c) Cost of goods sold (d) Net income 2025

4. Assuming that ending inventory is correctly counted at the end of 2025, what effect will the inventory error in 2024 have on reported amounts for (a) ending inventory, (b) retained earnings, (c) cost of goods sold, and (d) net income (ignoring tax effects) in 2025? (a) Ending inventory (b) Retained earnings (c) Cost of goods sold (d) Net income 2025

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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