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 $62,000 and Year 2 ending inventory is overstated by $32,000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Required: Year 1 $ 737,000 280,000 1,259,000 1,399,000 Year 2 $ 967,000 287,000 1,372,000 1,592,000 Year 3 $ 802,000 262,000 1,242,000 1,257,000 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 Corrected amount Total current assets: Reported amount Year 1 Year 2 Year 3 Prev 9 of 9 Next >
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 $62,000 and Year 2 ending inventory is overstated by $32,000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Required: Year 1 $ 737,000 280,000 1,259,000 1,399,000 Year 2 $ 967,000 287,000 1,372,000 1,592,000 Year 3 $ 802,000 262,000 1,242,000 1,257,000 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 Corrected amount Total current assets: Reported amount Year 1 Year 2 Year 3 Prev 9 of 9 Next >
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 $62,000 and Year 2 ending inventory is
overstated by $32,000.
For Year Ended December 31
(a) Cost of goods sold
(b) Net income
(c) Total current assets
(d) Total equity
Year 1
$ 737,000
280,000
1,259,000
1,399,000
Year 2
$ 967,000
Year 3
$ 802,000
262,000
1,242,000
1,257,000
287,000
1,372,000
1,592,000
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
Corrected amount
Total current assets:
Reported amount
Year 1
Year 2
Year 3
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