I On December 31, 20x1, Katherine Company purchases merchandise with shipping terms FOB destination. The company's accountant records the purchase on the day the order is placed. The merchandise is not included in the ending inventory. No additional journal entry is made when the merchandise arrives on January 5, 20x2. Assume that Katherine Company discovers the error at the beginning of 20x2. What journal entry should be made to correct the prior-year error? Multiple Choice Debit Inventory, Credit Cost of Goods Sold Debit Retained Earnings, Credit Inventory No journal entry is necessary Debit Inventory, Credit Retained Earnings
I On December 31, 20x1, Katherine Company purchases merchandise with shipping terms FOB destination. The company's accountant records the purchase on the day the order is placed. The merchandise is not included in the ending inventory. No additional journal entry is made when the merchandise arrives on January 5, 20x2. Assume that Katherine Company discovers the error at the beginning of 20x2. What journal entry should be made to correct the prior-year error? Multiple Choice Debit Inventory, Credit Cost of Goods Sold Debit Retained Earnings, Credit Inventory No journal entry is necessary Debit Inventory, Credit Retained Earnings
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On December 31, 20X1, Katherine Company purchases merchandise with shipping terms FOB destination. The company's accountant records the purchase on the day the order is
placed. The merchandise is not included in the ending inventory. No additional journal entry is made when the merchandise arrives on January 5, 20x2.
Assume that Katherine Company discovers the error at the beginning of 20x2. What journal entry should be made to correct the prior-year error?
Multiple Choice
Debit Inventory, Credit Cost of Goods Sold
Debit Retained Earnings, Credit Inventory
No journal entry is necessary
Debit Inventory, Credit Retained Earnings
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