Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical countsof inventory, it had made the following errors: Year 1 ending inventory is understated by $60,000 and Year 2 ending inventory isoverstated by $30,000.Year 2965,000 $285,0001,370,0001,590,000Year 3800,000260,0001,240,0001,255,000For Year Ended December 31Year 1(a) Cost of goods sold(b) Net income(c) Total current assets(d) Total equity24735,000 $278,0001,257,0001,397,000Required:1. For each key financial statement figure-(a), (b), (C), and (d) above-prepare a table to show the adjustments necessary to correct thereported 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 1Required 2For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary tocorrect the reported amounts. (Amounts to be deducted must be entered with a minus sign.)Year 1Year 2Year 3Cost of goods sold:Reported amount$735.000$965.000 $800,000Adjustments for:12/31/Year 1 error12/31/Year 2 errorCorrected amount$735,000 $965,000 $800,000Net income:Reported amount278,000$285,000$260,000Adjustments for:12/31/Year 1 error12/31/Year 2 errorCorrected amount278,000 $285,000 $260.000Total current assets:Reported amount$1,257,000$ 1,370,0002$1,240,000Adjustments for:12/31/Year 1 error12/31/Year 2 errorCorrected amount1,257,000 $1,370,0002$1,240,000Equity:Reported amount1,397,000 $1,590,000$ 1,255,000Adjustments for:12/31/Year 1 error12/31/Year 2 errorCorrected amount1,397,000 $1,590,000$1.255.000< Required 1Required 2 >

The ending inventory is calculated as : Beginning inventory + Purchases - COGS

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 $60,000 and Year 2 ending inventory is overstated by $30,000. Year 2 965,000 $ 285, 000 1,370,000 1,590,000 For Year Ended December 31 Year 1 $4 Year 3 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity 735,000 $ 278,000 1,257,000 1,397,000 800,000 260,000 1,240,000 1,255,000 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?

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 $60,000 and Year 2 ending inventory is overstated by $30,000. Year 2 965,000 $ 285, 000 1,370,000 1,590,000 For Year Ended December 31 Year 1 $4 Year 3 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity 735,000 $ 278,000 1,257,000 1,397,000 800,000 260,000 1,240,000 1,255,000 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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