Homework Help is Here – Start Your Trial Now!
Business
Accounting
Exercise 8.8 (Algo) Effects of Errors in Inventory Valuation (LO 8-5) Branson Electric prepared the following condensed income statements for two successive years: 2024 $ 3,000,000 1,050,000 $1,950,000 350,000 $1,600,000 Sales Cost of goods sold Gross profit on sales Operating expenses Net income At the end of 2023 (right-hand column), the inventory was understated by $47,000, but the error was not discovered until after the accounts had been closed and financial statements prepared at the end of 2024. The balance sheets for the two years showed owner's equity of $480,000 at the end of 2023 and $485,000 at the end of 2024. (Branson is organized as a sole proprietorship and does not incur income taxes expense.) Required: a. Compute the corrected net income figures for 2023 and 2024. b. Compute the gross profit amounts and the gross profit percentages for each year on the basis of corrected data. Note: Round "Gross profit percentage" to 2 decimal places (i.e. 1234 should be entered as 12.34) a. Corrected net income b. Gross profit amount b. Gross profit percentage 2023 $ 2,950,000 900,000 $ 2,050,000 250,000 $1,800,000 2024 % 2023 %

Exercise 8.8 (Algo) Effects of Errors in Inventory Valuation (LO 8-5) Branson Electric prepared the following condensed income statements for two successive years: 2024 $ 3,000,000 1,050,000 $1,950,000 350,000 $1,600,000 Sales Cost of goods sold Gross profit on sales Operating expenses Net income At the end of 2023 (right-hand column), the inventory was understated by $47,000, but the error was not discovered until after the accounts had been closed and financial statements prepared at the end of 2024. The balance sheets for the two years showed owner's equity of $480,000 at the end of 2023 and $485,000 at the end of 2024. (Branson is organized as a sole proprietorship and does not incur income taxes expense.) Required: a. Compute the corrected net income figures for 2023 and 2024. b. Compute the gross profit amounts and the gross profit percentages for each year on the basis of corrected data. Note: Round "Gross profit percentage" to 2 decimal places (i.e. 1234 should be entered as 12.34) a. Corrected net income b. Gross profit amount b. Gross profit percentage 2023 $ 2,950,000 900,000 $ 2,050,000 250,000 $1,800,000 2024 % 2023 %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Unc.6

 

 

Exercise 8.8 (Algo) Effects of Errors in Inventory Valuation (LO 8-5) Branson Electric prepared the following condensed income statements for two successive years: Sales Cost of goods sold Gross profit on sales Operating expenses Net income 2024 $ 3,000,000 1,050,000 $1,950,000 350,000 $ 1,600,000 At the end of 2023 (right-hand column), the inventory was understated by $47,000, but the error was not discovered until after the accounts had been closed and financial statements prepared at the end of 2024. The balance sheets for the two years showed owner's equity of $480,000 at the end of 2023 and $485,000 at the end of 2024. (Branson is organized as a sole proprietorship and does not incur income taxes expense.) a. Corrected net income b. Gross profit amount b. Gross profit percentage Required: a. Compute the corrected net income figures for 2023 and 2024. b. Compute the gross profit amounts and the gross profit percentages for each year on the basis of corrected data. Note: Round "Gross profit percentage" to 2 decimal places (i.e. .1234 should be entered as 12.34) 2024 2023 $ 2,950,000 900,000 $ 2,050,000 250,000 $ 1,800,000 % 2023 %
Transcribed Image Text:Exercise 8.8 (Algo) Effects of Errors in Inventory Valuation (LO 8-5) Branson Electric prepared the following condensed income statements for two successive years: Sales Cost of goods sold Gross profit on sales Operating expenses Net income 2024 $ 3,000,000 1,050,000 $1,950,000 350,000 $ 1,600,000 At the end of 2023 (right-hand column), the inventory was understated by $47,000, but the error was not discovered until after the accounts had been closed and financial statements prepared at the end of 2024. The balance sheets for the two years showed owner's equity of $480,000 at the end of 2023 and $485,000 at the end of 2024. (Branson is organized as a sole proprietorship and does not incur income taxes expense.) a. Corrected net income b. Gross profit amount b. Gross profit percentage Required: a. Compute the corrected net income figures for 2023 and 2024. b. Compute the gross profit amounts and the gross profit percentages for each year on the basis of corrected data. Note: Round "Gross profit percentage" to 2 decimal places (i.e. .1234 should be entered as 12.34) 2024 2023 $ 2,950,000 900,000 $ 2,050,000 250,000 $ 1,800,000 % 2023 %
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Financial Reporting in Hyperinflationary Economies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS