Errors in Inventory Counts The following information was taken from therecords of Taylor Enterprises:20162015$60,000 $50,000420,000 400,000Cost of goods available for sale 480,000 450,00055,000 60,000$425,000 $390,000Beginning inventoryCost of goods purchasedEnding inventoryCost of goods soldThe following two errors were made in the physical inventory counts:1. 2015 ending inventory was understated by $7,000.2. 2016 ending inventory was overstated by $3,000.Compute the correct cost of goods sold for both 2015 and 2016.

Calculation of the correct cost of goods sold for the year 2015:The ending inventory for the year…

Answered: Errors in Inventory Counts The…

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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Required information P7-6 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-5 [The following information applies to the questions displayed below.] The income statement for Pruitt Company summarized for a four-year period shows the following: Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income P7-6 Part 1 2016 2017 $2,041,000 $2,469,000 1,618,000 1,492,000 549,000 484,000 65,000 19,500 $45,500 Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income 851,000 496,000 355,000 106,500 $248,500 496,000 334,000 2018 $2,712,000 1,781,000 100,200 233,800 931,000 522,000 409,000 122,700 $286,300 An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $21,000. The company uses a periodic inventory system. Answer is complete but not entirely correct. PRUITT COMPANY Income Statement For the Four-Year Period 2016 2017 $ 2,041,000…
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Sheffield Corp. accumulates the following cost and market data at December 31. Inventory Categories Cost Data Market Data Cameras $12,188 $13,228 Camcorders 8,758 9,458 DVDs 11,304 9,814 Compute the lower-of-cost-or-market valuation for company’s inventory. The lower-of-cost-or-market value $Enter a dollar amount
Cullumber Hardware reported cost of goods sold as follows. Beginning inventory Cost of goods purchased Cost of goods available for sale Less: Ending inventory Cost of goods sold 2027 Cost of goods sold $ $30,000 175,000 205,000 35,000 $170,000 2026 2027 $ 20,000 150,000. 170,000 Cullumber made two errors: 1.2026 ending inventory was overstated by $3,100. 2.2027 ending inventory was understated by $6,100. Compute the correct cost of goods sold for each year. 30,000 $140,000 $ 2026
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P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2013 2012 $850,000 650,000 500,000 526 70,000 5600 2014 $925,000 750,000 550,000 90,000 $900,000 Total assets Owner's equity Cost of goods sold 700,000 550,000 Profit 80,000 Alyssa Company made the following errors in determining its ending inventory: 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets 2. Owner's equity 3. Cost of goods sold…
Ayayai Hardware Limited reported the following amounts for its cost of goods sold and Inventory: Cost of goods sold Ending inventory 2018 Ending inventory $169,200 Cost of goods sold 37,400 2017 Ayayai made two errors: (1) ending inventory for 2018 was overstated by $2,000 and (2) ending inventory for 2017 was understated by $4,100. Assume that neither error has been found or corrected. $152,900 Calculate the correct ending inventory and cost of goods sold amounts for each year. $ 29,400 2018 tA $ LA 2017
Computing and Evaluating Inventory Turnover for Two CompaniesAbercrombie & Fitch Co. (ANF) and TJX Companies (TJX) report the following information in their respective January 2016 10-K reports relating to their 2015 and 2014 fiscal years. Abercrombie & Fitch TJX Companies $ millions Sales Cost of Goods Sold Inventories Sales Cost of Goods Sold Inventories 2015 $3,444 $1,336 $462 $29,834 $20,924 $3,846 2014 3,744 1,430 461 29,078 20,777 3,218 Compute the 2015 inventory turnover for each of these two retailers.Round answers to two decimal places. Inventory turnover rate ANF Answer TJX Answer
Errors in Inventory Counts The following information was taken from the records of Tinker Enterprises: Year 2 Year 1 $105,000 $126,000 Beginning Inventory Cost of goods purchased 840,000 882,000 Cost of goods available for sale 945,000 1,008,000 126,000 115,500 $819,000 $892,500 Ending inventory Cost of goods sold The following two errors were made in the physical inventory counts: 1. Year 1 ending inventory was understated by $16,800 2. Year 2 ending inventory was overstated by $8,400 Compute the correct cost of goods sold for both years. Year 1 Year 2 Cost of goods sold $ 802,200 $ 0

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