*Note any error of 2019 ending inventory is carried over to 2020 as an error of the beginning inventory. P uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, P's retained earnings at January 1, 2021, would be: O Correct. O $30,000 overstated O $150,000 overstated. O $270,000 overstated.

*Note any error of 2019 ending inventory is carried over to 2020 as an error of the beginning inventory. P uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, P's retained earnings at January 1, 2021, would be: O Correct. O $30,000 overstated O $150,000 overstated. O $270,000 overstated.

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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Question

During 2021, P Company discovered that the ending inventories reported on its financial statements were incorrect by the
following amounts:
2019
$ 120,000 understated
2020
$ 150,000 overstated
*Note any error of 2019 ending inventory is carried over to 2020 as an error of the beginning inventory.
P uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost
method. Prior to any adjustments for these errors and ignoring income taxes, P's retained earnings at January 1, 2021, would be:
O Correct.
O $30,000 overstated
O $150,000 overstated.
O $270,000 overstated.

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