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For each of the independent case, indicate the effect of the error, if any, on the accounts and the amount using the following code: Fany. U= Understated by ($1000) ;O = Overstated by ($1000): NE = No effect A) A company understated its ending inventory in Year 1 by $25,000 and also understated its ending inventory in Year 2 by $20,000. Neither error was discovered until Year 3. As a result, of these two errors, gross profit for Year 2 was. Answer format for example : Overstated by ($1000). B) COVID Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the next year. As a result, COVID's cost of goods sold for this year was.

For each of the independent case, indicate the effect of the error, if any, on the accounts and the amount using the following code: Fany. U= Understated by ($1000) ;O = Overstated by ($1000): NE = No effect A) A company understated its ending inventory in Year 1 by $25,000 and also understated its ending inventory in Year 2 by $20,000. Neither error was discovered until Year 3. As a result, of these two errors, gross profit for Year 2 was. Answer format for example : Overstated by ($1000). B) COVID Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the next year. As a result, COVID's cost of goods sold for this year was.

FINANCIAL ACCOUNTING
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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For each of the independent case, indicate the effect of the error, if any, on the accounts and the amount using the following code: U= Understated by ($1000) ; O = Overstated by ($1000); NE = No effect A) A company understated its ending inventory in Year 1 by $25,000 and also understated its ending inventory in Year 2 by $20,000. Neither error was discovered until Year 3. As a result, of these two errors, gross profit for Year 2 was. Answer format: for example : Overstated by ($1000). B) COVID Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the next year. As a result, COVID's cost of goods sold for this year was. -.....--- Answer format for example : Overstated by ($1000).
Transcribed Image Text:For each of the independent case, indicate the effect of the error, if any, on the accounts and the amount using the following code: U= Understated by ($1000) ; O = Overstated by ($1000); NE = No effect A) A company understated its ending inventory in Year 1 by $25,000 and also understated its ending inventory in Year 2 by $20,000. Neither error was discovered until Year 3. As a result, of these two errors, gross profit for Year 2 was. Answer format: for example : Overstated by ($1000). B) COVID Co. uses a periodic inventory system. Beginning inventory on January 1 was overstated by $32,000, and its ending inventory on December 31 was understated by $62,000. These errors were not discovered until the next year. As a result, COVID's cost of goods sold for this year was. -.....--- Answer format for example : Overstated by ($1000).
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