Your answer is partially correct. Describe the impact of the error on (1) cost of goods sold, (2) income before income tax, (3) assets, (4) liabilities, and (5) total shareholders' equity for each of the two years. Cost of (1) Understated goods sold Income (2) before income tax (3) Assets Overstated Will not effect ✓ (4) Liabilities Will not effect Total (5) shareholders' equity 2021 5,000 Overstated Understated Understated Overstated Will not effect ✓ i Understated 2020 Flounder Hardware Limited reported the following amounts for its cost of goods sold and Inventory: 2021 2020 Cost of goods sold $169,400 $154,100 Ending inventory 37,500 30,300 Flounder made two errors in 2020. It recorded a $3,900 inventory purchase in transit at the end of 2020 that was shipped FOB destination and included this amount in ending inventory. Also during the year-end inventory count, staff forgot to count $5,000 of ending inventory that was on hand. No one discovered these errors in 2020. (a) Your answer is correct. Calculate the correct ending inventory and cost of goods sold amounts for each year. 2021 2020 Ending inventory $ 37,500 $ 31,400 Cost of goods sold $ 174,400 $ 149,100
Your answer is partially correct. Describe the impact of the error on (1) cost of goods sold, (2) income before income tax, (3) assets, (4) liabilities, and (5) total shareholders' equity for each of the two years. Cost of (1) Understated goods sold Income (2) before income tax (3) Assets Overstated Will not effect ✓ (4) Liabilities Will not effect Total (5) shareholders' equity 2021 5,000 Overstated Understated Understated Overstated Will not effect ✓ i Understated 2020 Flounder Hardware Limited reported the following amounts for its cost of goods sold and Inventory: 2021 2020 Cost of goods sold $169,400 $154,100 Ending inventory 37,500 30,300 Flounder made two errors in 2020. It recorded a $3,900 inventory purchase in transit at the end of 2020 that was shipped FOB destination and included this amount in ending inventory. Also during the year-end inventory count, staff forgot to count $5,000 of ending inventory that was on hand. No one discovered these errors in 2020. (a) Your answer is correct. Calculate the correct ending inventory and cost of goods sold amounts for each year. 2021 2020 Ending inventory $ 37,500 $ 31,400 Cost of goods sold $ 174,400 $ 149,100
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Your answer is partially correct.
Describe the impact of the error on (1) cost of goods sold, (2) income before income tax, (3) assets, (4) liabilities, and (5) total
shareholders' equity for each of the two years.
Cost of
(1)
Understated
goods sold
Income
(2) before
income tax
(3) Assets
Overstated
Will not effect ✓
(4) Liabilities
Will not effect
Total
(5) shareholders'
equity
2021
5,000
Overstated
Understated
Understated
Overstated
Will not effect ✓
i
Understated
2020
Transcribed Image Text:Flounder Hardware Limited reported the following amounts for its cost of goods sold and Inventory:
2021
2020
Cost of goods sold $169,400
$154,100
Ending inventory
37,500
30,300
Flounder made two errors in 2020. It recorded a $3,900 inventory purchase in transit at the end of 2020 that was shipped FOB
destination and included this amount in ending inventory. Also during the year-end inventory count, staff forgot to count $5,000 of
ending inventory that was on hand. No one discovered these errors in 2020.
(a)
Your answer is correct.
Calculate the correct ending inventory and cost of goods sold amounts for each year.
2021
2020
Ending inventory
$
37,500
$
31,400
Cost of goods sold
$
174,400
$
149,100
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