Madison River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y8, Madison incorrectly counted its inventory as $545,000 instead of the correct amount of $555,400. a. State the effects of the error on the December 31, 20Y8, balance sheet of Madison River Supply. Balance Sheet Items Understated / Overstated Amount Inventory Understated v Current Assets Understated v Total Assets Understated v Stockholders' Equity Understated v b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8. Income Statement Items Overstated / Understated Amount Cost of Goods Sold Overstated Gross Profit Understated v Understated v Net Income C. If uncorrected, what would be the effects of the error on the 20Y9 income statement? Overstated / Understated Amount Income Statement Items UnderstatedV Cost of Goods Sold Overstated v Gross Profit Overstatedv Net Income
Madison River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y8, Madison incorrectly counted its inventory as $545,000 instead of the correct amount of $555,400. a. State the effects of the error on the December 31, 20Y8, balance sheet of Madison River Supply. Balance Sheet Items Understated / Overstated Amount Inventory Understated v Current Assets Understated v Total Assets Understated v Stockholders' Equity Understated v b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8. Income Statement Items Overstated / Understated Amount Cost of Goods Sold Overstated Gross Profit Understated v Understated v Net Income C. If uncorrected, what would be the effects of the error on the 20Y9 income statement? Overstated / Understated Amount Income Statement Items UnderstatedV Cost of Goods Sold Overstated v Gross Profit Overstatedv Net Income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![HW #6-Chapter 6
eBook
Effect of Errors in Physical Inventory
Madison River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y8, Madison incorrectly counted its
inventory as $545,000 instead of the correct amount of $555,400.
a. State the effects of the error on the December 31, 20Y8, balance sheet of Madison River Supply.
Balance Sheet Items
Understated / Overstated
Amount
Inventory
Understated v
Current Assets
Understated v
Total Assets
Understated v
Stockholders' Equity
Understated v
b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8.
Income Statement Items
Overstated/ Understated
Amount
Cost of Goods Sold
Overstatedv
Gross Profit
Understated v
Net Income
Understated v
C. If uncorrected, what wwould be the effects of the error on the 20Y9 income statement?
Overstated / Understated
Amount
Income Statement Items
Understated v
Cost of Goods Sold
Overstated
Gross Profit
Previcus
TA
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Transcribed Image Text:HW #6-Chapter 6
eBook
Effect of Errors in Physical Inventory
Madison River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y8, Madison incorrectly counted its
inventory as $545,000 instead of the correct amount of $555,400.
a. State the effects of the error on the December 31, 20Y8, balance sheet of Madison River Supply.
Balance Sheet Items
Understated / Overstated
Amount
Inventory
Understated v
Current Assets
Understated v
Total Assets
Understated v
Stockholders' Equity
Understated v
b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8.
Income Statement Items
Overstated/ Understated
Amount
Cost of Goods Sold
Overstatedv
Gross Profit
Understated v
Net Income
Understated v
C. If uncorrected, what wwould be the effects of the error on the 20Y9 income statement?
Overstated / Understated
Amount
Income Statement Items
Understated v
Cost of Goods Sold
Overstated
Gross Profit
Previcus
TA
%24
%24
![eBook
Madison River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y8, Madison incorrectly counted its
inventory as $545,000 instead of the correct amount of $555,400.
a. State the effects of the error on the December 31, 20Y8, balance sheet of Madison River Supply.
Balance Sheet Items
Understated / Overstated
Amount
Inventory
Understated v
Current Assets
Understated v
Total Assets
Understated v
Stockholders' Equity
Understated
b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8.
Income Statement Items
Overstated/ Understated
Amóunt
Cost of Goods Sold
Overstatedv
Gross Profit
Understated v
Understated
Net Income
C. If uncorrected, what would be the effects of the error on the 20Y9 income statement?
Amount
Overstated/ Understated
Income Statement Items
Understated v
Cost of Goods Sold
OverstatedV
Gross Profit
Overstatedv
Net Income
Previous
%24
%24
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F60eed353-4ad1-4b61-b1a0-b24e01c73db3%2F6379823e-8f73-4e1b-9a15-c725c2a4019f%2F118v53_processed.jpeg&w=3840&q=75)
Transcribed Image Text:eBook
Madison River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y8, Madison incorrectly counted its
inventory as $545,000 instead of the correct amount of $555,400.
a. State the effects of the error on the December 31, 20Y8, balance sheet of Madison River Supply.
Balance Sheet Items
Understated / Overstated
Amount
Inventory
Understated v
Current Assets
Understated v
Total Assets
Understated v
Stockholders' Equity
Understated
b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8.
Income Statement Items
Overstated/ Understated
Amóunt
Cost of Goods Sold
Overstatedv
Gross Profit
Understated v
Understated
Net Income
C. If uncorrected, what would be the effects of the error on the 20Y9 income statement?
Amount
Overstated/ Understated
Income Statement Items
Understated v
Cost of Goods Sold
OverstatedV
Gross Profit
Overstatedv
Net Income
Previous
%24
%24
%24
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