Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical coun of inventory, it had made the following errors: Year 1 ending inventory is understated by $51,000 and Year 2 ending inventory is overstated by $21,000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Required 1 Required 2 Year 1 $ 726,000 269,000 1,248,000 1,388,000 Year 2 $ 956,000 276,000 1,361,000 1,581,000 Required: 1. For each key financial statement figure-(a), (b). (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? Complete this question by entering your answers in the tabs below. Cost of goods sold: Reported amount error Adjustment for 12/31/Year 1 Adjustment for 12/31/Year 2 error Corrected amount Net income Reported amount Year 3. $ 791,000 251,000. 1,231,000 1,246,000 For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.) Year 1, Year 2 Year 3
Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical coun of inventory, it had made the following errors: Year 1 ending inventory is understated by $51,000 and Year 2 ending inventory is overstated by $21,000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Required 1 Required 2 Year 1 $ 726,000 269,000 1,248,000 1,388,000 Year 2 $ 956,000 276,000 1,361,000 1,581,000 Required: 1. For each key financial statement figure-(a), (b). (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? Complete this question by entering your answers in the tabs below. Cost of goods sold: Reported amount error Adjustment for 12/31/Year 1 Adjustment for 12/31/Year 2 error Corrected amount Net income Reported amount Year 3. $ 791,000 251,000. 1,231,000 1,246,000 For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.) Year 1, Year 2 Year 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical counts
of inventory, it had made the following errors: Year 1 ending inventory is understated by $51,000 and Year 2 ending inventory is
overstated by $21,000.
For Year Ended December 31
(a) Cost of goods sold
(b) Net income
(c) Total current assets
(d) Total equity
Year 1
$ 726,000
269,000
1,248,000
1,388,000
Cost of goods sold:
Reported amount
Adjustment for 12/31/Year 1 error
Adjustment for 12/31/Year 2 error
Corrected amount
Net income:
Required:
1. For each key financial statement figure-(a), (b). (c), and (d) above-prepare a table to show the adjustments necessary to correct the
reported amounts.
2. What is the total error in combined net income for the three-year period resulting from the inventory errors?
Complete this question by entering your answers in the tabs below.
Reported amount
Adjustment for 12/31/Year 1 error
Adjustment for 12/31/Year 2
error
Corrected amount
Year 2
$ 956,000
276,000
1,361,000
1,581,000
Required 1 Required 2
For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to
correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.)
Year 2
Year 3
Year 3.
$ 791,000
251,000.
1,231,000
1,246,000
Year 1,

Transcribed Image Text:Required 1 Required 2
For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to
correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.)
Cost of goods sold:
Reported amount
Adjustment for 12/31/Year 1 error
Adjustment for 12/31/Year 2 error
Corrected amount
Net income:
Reported amount
Adjustment for 12/31/Year 1 error
Adjustment for 12/31/Year 2 error
Corrected amount
Total current assets:
Reported amount
Adjustment for 12/31/Year 1 error
Adjustment for 12/31/Year 2 error
Corrected amount
Equity:
Reported amount
Adjustment for 12/31/Year 1 error
Adjustment for 12/31/Year 2 error
Corrected amount
Show Transcribed Text
For Year Ended December 31
(a) Cost of goods sold
(b) Net income
(c) Total current assets
(d) Total equity
Year 1
3
Required 1
Required t
Required 2
Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical counts
of inventory, it had made the following errors: Year 1 ending inventory is understated by $51,000 and Year 2 ending inventory is
overstated by $21,000.
Year 2
Year
Year 2
Year
$726,000 $956,000 $791,000
269,000 1771 276,000 113 251,000
1,248,000 1,361,000 1,231,000
1,388,000 1,581,000 1,246,000
Complete this question by entering your answers in the tabs below.
Required:
1. For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the
reported amounts.
2. What is the total error in combined net income for the three-year period resulting from the inventory errors?
Year 3
Required 1
Required 2 >
What is the total error in combined net income for the three-year period resulting from the inventory errors?
Error in total net income of three years
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