Exercise 4-16 (Algo) Impacts of inventory error on key accounts LO P3 A retailer completed a physical count of ending merchandise inventory. When counting inventory, employees did not include $4,700 of incoming goods shipped by a supplier on December 31 under FOB shipping point. These goods had been recorded in Merchandise Inventory, but they were not included in the physical count because they were in transit. This means shrinkage was incorrectly overstated by $4,700. Compute the amount of overstatement or understatement for each of the following amounts for this period. a. Ending inventory b. Total assets c. Net income d. Total equity
Exercise 4-16 (Algo) Impacts of inventory error on key accounts LO P3 A retailer completed a physical count of ending merchandise inventory. When counting inventory, employees did not include $4,700 of incoming goods shipped by a supplier on December 31 under FOB shipping point. These goods had been recorded in Merchandise Inventory, but they were not included in the physical count because they were in transit. This means shrinkage was incorrectly overstated by $4,700. Compute the amount of overstatement or understatement for each of the following amounts for this period. a. Ending inventory b. Total assets c. Net income d. Total equity
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Exercise 4-16 (Algo) Impacts of inventory error on key accounts LO P3
A retailer completed a physical count of ending merchandise inventory. When counting inventory, employees did not include $4,700 of
incoming goods shipped by a supplier on December 31 under FOB shipping point. These goods had been recorded in Merchandise
Inventory, but they were not included in the physical count because they were in transit. This means shrinkage was incorrectly
overstated by $4,700.
Compute the amount of overstatement or understatement for each of the following amounts for this period.
a. Ending inventory
b. Total assets
c. Net income
d. Total equity
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