During the taking of its physical inventory on December 31, 2014, Kate's Interiors Company incorrectly counted its inventory as $446,935 instead of the correct amount of $500,565. Indicate the effect of the misstatement on Kate's Interiors's December 31, 2014, balance sheet and income statement for the year ended December 31, 2014. Also record the amount of each overstatement or understatement. Enter all amounts as positive numbers. Cost of merchandise sold Current assets Gross profit Merchandise inventory Net income Owner's equity Total assets $ S S S S S S

During the taking of its physical inventory on December 31, 2014, Kate's Interiors Company incorrectly counted its inventory as $446,935 instead of the correct amount of $500,565. Indicate the effect of the misstatement on Kate's Interiors's December 31, 2014, balance sheet and income statement for the year ended December 31, 2014. Also record the amount of each overstatement or understatement. Enter all amounts as positive numbers. Cost of merchandise sold Current assets Gross profit Merchandise inventory Net income Owner's equity Total assets $ S S S S S S

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Description: During the taking of its physical inventory on December 31, 2014, Kate's Interiors Company incorrectly counted its inventory as $446,935 instead of the correct amount of $500,565. Indicate theeffect of the misstatement on Kate's Interiors's December

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

During the taking of its physical inventory on December 31, 2014, Kate's Interiors Company incorrectly counted its inventory as $446,935 instead of the correct amount of $500,565. Indicate the
effect of the misstatement on Kate's Interiors's December 31, 2014, balance sheet and income statement for the year ended December 31, 2014. Also record the amount of each overstatement or
understatement. Enter all amounts as positive numbers.
Cost of merchandise sold
Current assets
Gross profit
Merchandise inventory
Net income
Owner's equity
Total assets
$
$
$
$
$
S
S

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