8. On 12/30/20, Redding Corporation sold merchandise for $75,000 to Norbert Company. The terms of the sale were net 30, FOB shipping point. The merchandise was shipped on 12/31/20, and arrived at Norbert on 1/5/21. Because of a clerical error, Redding did not record the sale until 1/7/21, and the merchandise (before Redding's 25% markup on cost) was included in Redding's inventory at 12/31/20. As a result, Redding's net income for the year ended 12/31/20 was: a. Overstated by $75,000. b. Understated by $60,000. c. Understated by $15,000. d. Correctly stated; not impacted by inventory.
8. On 12/30/20, Redding Corporation sold merchandise for $75,000 to Norbert Company. The terms of the sale were net 30, FOB shipping point. The merchandise was shipped on 12/31/20, and arrived at Norbert on 1/5/21. Because of a clerical error, Redding did not record the sale until 1/7/21, and the merchandise (before Redding's 25% markup on cost) was included in Redding's inventory at 12/31/20. As a result, Redding's net income for the year ended 12/31/20 was: a. Overstated by $75,000. b. Understated by $60,000. c. Understated by $15,000. d. Correctly stated; not impacted by inventory.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![8. On 12/30/20, Redding Corporation sold merchandise for $75,000 to Norbert Company. The terms of
the sale were net 30, FOB shipping point. The merchandise was shipped on 12/31/20, and arrived at
Norbert on 1/5/21. Because of a clerical error, Redding did not record the sale until 1/7/21, and the
merchandise (before Redding's 25% markup on cost) was included in Redding's inventory at
12/31/20. As a result, Redding's net income for the year ended 12/31/20 was:
a. Overstated by $75,000.
b. Understated by $60,000.
c. Understated by $15,000.
d. Correctly stated; not impacted by inventory.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F98a825cc-9eb3-46df-8bba-91c1e0af5ccb%2Fbea7e56f-5925-4e32-8168-63bd6e8ac4af%2Fgs2lrl.png&w=3840&q=75)
Transcribed Image Text:8. On 12/30/20, Redding Corporation sold merchandise for $75,000 to Norbert Company. The terms of
the sale were net 30, FOB shipping point. The merchandise was shipped on 12/31/20, and arrived at
Norbert on 1/5/21. Because of a clerical error, Redding did not record the sale until 1/7/21, and the
merchandise (before Redding's 25% markup on cost) was included in Redding's inventory at
12/31/20. As a result, Redding's net income for the year ended 12/31/20 was:
a. Overstated by $75,000.
b. Understated by $60,000.
c. Understated by $15,000.
d. Correctly stated; not impacted by inventory.
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