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 $69,000 and Year 2 ending inventory is overstated by $39,000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Year 1 $ 744,000 Year 2 $ 974,000 287,000 1,266,000 1,406,000 294,000 1,379,000 1,599,000 Year 3 $ 809,000 269,000 1,249,000 1,264,000 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. 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. Note: 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 Year 1 Year 2 Year 3 0 $ 0 269,000
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 $69,000 and Year 2 ending inventory is overstated by $39,000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Year 1 $ 744,000 Year 2 $ 974,000 287,000 1,266,000 1,406,000 294,000 1,379,000 1,599,000 Year 3 $ 809,000 269,000 1,249,000 1,264,000 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. 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. Note: 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 Year 1 Year 2 Year 3 0 $ 0 269,000
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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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 $69,000 and Year 2 ending inventory is
overstated by $39,000.
For Year Ended December 31
(a) Cost of goods sold
(b) Net income
(c) Total current assets
(d) Total equity
Year 1
$ 744,000
Year 2
$ 974,000
287,000
1,266,000
1,406,000
294,000
1,379,000
1,599,000
Year 3
$ 809,000
269,000
1,249,000
1,264,000
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.
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.
Note: 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
Year 1
Year 2
Year 3
0 $
0
269,000
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