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 isunderstated by $61,000 and Year 2 ending inventory is overstated by $31,000.For Year Ended December 31 Year 1Year 2Year 3$ 736,000$ 966,000$801,000(a) Cost of goods sold(b) Net income(c) Total current assets286,000 261,0001,241,0001,258,000 1,371,000(d) Total equity1,398,000 1,591,000 1,256,000279,000Required: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?

Financial statements are standardized reports that give an in-depth analysis of an organization's…

Navajo Company's year-end financial statements show the following. The company recently discovered that in making phy understated by $61,000 and Year 2 ending inventory is overstated by $31,000. For Year Ended December 31 Year 1 Year 2 Year 3 (a) Cost of goods sold $ 736,000 $966,000 $801,000 (b) Net income 279,000 286,000 261,000 (c) Total current assets 1,258,000 1,371,000 1,241,000

Navajo Company's year-end financial statements show the following. The company recently discovered that in making phy understated by $61,000 and Year 2 ending inventory is overstated by $31,000. For Year Ended December 31 Year 1 Year 2 Year 3 (a) Cost of goods sold $ 736,000 $966,000 $801,000 (b) Net income 279,000 286,000 261,000 (c) Total current assets 1,258,000 1,371,000 1,241,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Preparation of Operating Activities Section—Indirect Method, Periodic Inventory) The income statement of Dunne Company is shown below.Dunne Company Income Statement For the Year Ended December 31, 2020Sales revenue $ 8,900,000 Cost of goods sold 5,700,000 Gross profit 3,200,000 Operating expenses Selling expenses 550,000 Administrative expenses 725,000 1,275,000 Net income 1,925,000 1. Accounts receivable increased 340,000 during the year2. Inventory decreased $200,000 during the year3. Prepaid expenses increased $150,000 during the year4. Accounts payable to suppliers decreased $310,000 during the year5. Accrued expenses payable increased $70,000 during the year6. Administrative expenses include depreciation expense of $60,000 Prepare the operating activities section of the statement of cash flows for the year ended Dec 31, 2020 for Dunne company, using the indirect method
SCC Company reported the following for the current year: Net sales $ 48,000 Cost of goods sold 40,000 Beginning balance in inventory 2,000 Ending balance in inventory 8,000 Compute (a) inventory turnover and (b) days’ sales in inventory. Compute the inventory turnover. Inventory Turnover Numerator: / Denominator: = Inventory Turnover / = Inventory turnover / = 0 times Compute the days’ sales in inventory. Days’ Sales In Inventory Numerator: / Denominator: × Days = Days’ Sales In Inventory / × = Days’ sales in inventory / × = 0 days
For 20Y2, Macklin Inc. reported a significant decrease in net income. At the end of the year, John Mayer, the president, is presented with the following condensed comparative income statement: Macklin Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Υ2 20Y1 Sales $483,672 $408,000 Cost of goods sold (358,800) (260,000) Gross profit $124,872 $148,000 Selling expenses $(50,150) $(34,000) Administrative expenses (29,520) (22,000) Total operating expenses $(79,670) $(56,000) Operating income $45,202 $92,000 Other revenue 2,166 1,700 Income before income tax expense $47,368 $93,700 Income tax expense (13,300) (28,100) Net income $34,068 $65,600 Required:
Delta Apparel Inc. uses a perpetual inventory system. At the beginning of the year inventory amounted to $ 50,000. During the year, the company purchased merchandise for $ 230,000 and sold merchandise costing $ 245,000. A physical inventory taken at year-end indicated shrinkage losses of $4,000. Prior to the recording of these shrinkage losses, the year-end balance in the companys Inventory account was :- a. $ 31,000 b. $ 35,000 c. $ 50,000 d. $ 55,00
Inventory Analysis The following data were extracted from the income statement of Brecca Systems Inc.: Current Year Preceding Year Sales $9,700,000 $7,175,000 Beginning inventories 420,000 400,000 Cost of goods sold 5,820,000 4,305,000 Ending inventories 550,000 420,000 a. (1). Determine for each year the inventory turnover. Round answers to one decimal place. Current year Preceding year (2). Determine for each year the days' sales in inventory. Assume there are 365 days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place. Current year Preceding year days days b. What conclusions can be drawn from these data concerning the inventories?
Perez Corporation has the following financial data for the years 20X1 and 20X2: Sales Cost of goods sold Inventory 20X1 20X2 20X1 $ 5,221,000 3,632,000 454,000 a. Compute the inventory turnover for each year using the formula Sales/Inventory. Note: Round your answers to 1 decimal place. Inventory Turnover Ratio times times 20X2 $ 6,578,000 4,862,000 572,000 b. Compute inventory turnover based on an alternative calculation that is used by many financial analysts, Cost of goods sold/Inventory, for each year. Note: Round your answers to 1 decimal place.
The income statement for Rhino Company for the current year ended June 30 is as follows: 1 Sales $450,000.00 2 Cost of merchandise sold 151,700.00 3 Gross profit $298,300.00 4 Operating expenses: 5 Depreciation expense $37,780.00 6 Other operating expenses 115,450.00 7 Total operating expenses 153,230.00 8 Income before income tax $145,070.00 9 Income tax expense 39,310.00 10 Net income $105,760.00 The balances of selected accounts at the beginning and the end of the current year are as follows: End Beginning of Year of Year Accounts receivable (net) $36,230 $31,850 Inventories 93,760 81,240 Prepaid expenses 14,670 15,660 Accounts payable (merchandise creditors) 67,950 63,470 Accrued expenses payable (operating expenses) 19,130 20,560 Income tax payable 4,390 4,390 Prepare the Cash Flows from Operating…
Income statement data for Winthrop Company for two recent years ended December 31, are as follows: Current Year Previous Year Sales $541,800 $430,000 Cost of goods sold 458,800 370,000 Gross profit $83,000 $60,000 Selling expenses $24,360 $21,000 Administrative expenses 21,080 17,000 Total operating expenses $45,440 $38,000 Income before income tax $37,560 $22,000 Income tax expenses 15,000 8,800 Net income $22,560 $13,200 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop Company Comparative Income Statement For the Years Ended December 31 Current Previous Increase Increase year year (Decrease) (Decrease) Amount Amount Amount Percent Sales $541,800 $430,000 % Cost of goods sold 458,800 370,000 Gross profit $83,000 $60,000 % Selling expenses $24,360 $21,000 % Administrative expenses 21,080 17,000 % Total operating expenses…
AFW inc. reported these figures for its fiscal year (amounts in millions): Net sales $2,100 Cost of goods sold $1,140 Ending inventory $330 Suppose AFW later learns that ending inventory was overstated by $8 million. What are the correct amounts for a) Net sales b) Ending inventory c) Cost of goods sold d) Gross profit
Income statement data for Winthrop Company for two recent years ended December 31 are as follows: 1 Current Year Previous Year 2 Sales $1,596,000.00 $1,400,000.00 3 Cost of goods sold 1,316,700.00 1,197,000.00 4 Gross profit $279,300.00 $203,000.00 5 Selling expenses $76,950.00 $67,500.00 6 Administrative expenses 55,000.00 50,000.00 7 Total operating expenses $131,950.00 $117,500.00 8 Income before income tax $147,350.00 $85,500.00 9 Income tax expense 11,060.00 7,000.00 10 Net income $136,290.00 $78,500.00 A. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. Round percentages to one decimal place. B. What conclusions can be drawn from the horizontal analysis? Round the answers to one decimal place.
Inventory Turnover and Days’ Sales in Inventory Shown below are data from the Northern Company’s accounting records: Year 1 Year 2 Sales Revenue $8,000,000 $11,000,000 Cost of Goods Sold 4,000,000 4,800,000 Beginning Inventory 510,000 540,000 Ending Inventory 550,000 600,000 Calculate the company’s (a) inventory turnover and (b) days’ sales in inventory for both years.Round your answer to two decimal points. Year 1 Year 2 Inventory turnover Answer Answer Days' sales in inventory Answer Answer
Hull Company reported the following income statement information for the current year: Sales $429,000 Cost of goods sold: $160,500 Beginning inventory Cost of goods purchased 292,000 Cost of goods available for sale Ending inventory 452,500 163,000 Cost of goods sold 289,500 Gross profit $139,500 The beginning inventory balance is correct. However, the ending inventory figure was overstated by $39,000. Given this information, the correct gross profit would be: Multiple Choice $100,500. $139,500. $178,500. $113,500.