P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2014 2013 2012 $850,000 650,000 Total assets $925,000 $900,000 Owner's equity Cost of goods sold Profit 750,000 550,000 700,000 550,000 500,000 2 70,000 90,000 80,000 Alyssa Company made the following errors in determining its ending inventory: 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets 2. Owner's equity 3. Cost of goods sold 4. Profit (b) Indicate the effect of these errors (overstated, understated, or no effect) on cash at the end of 2012, 2013, and 2014.

P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2014 2013 2012 $850,000 650,000 Total assets $925,000 $900,000 Owner's equity Cost of goods sold Profit 750,000 550,000 700,000 550,000 500,000 2 70,000 90,000 80,000 Alyssa Company made the following errors in determining its ending inventory: 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets 2. Owner's equity 3. Cost of goods sold 4. Profit (b) Indicate the effect of these errors (overstated, understated, or no effect) on cash at the end of 2012, 2013, and 2014.

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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P6-7A The records of Alyssa Company show the following amounts in its December 31 financial statements: 2013 2012 $850,000 650,000 500,000 526 70,000 5600 2014 $925,000 750,000 550,000 90,000 $900,000 Total assets Owner's equity Cost of goods sold 700,000 550,000 Profit 80,000 Alyssa Company made the following errors in determining its ending inventory: 1. The ending inventory account balance at December 31, 2012, included $20,000 of goods held on consignment for Gillies Company. 2. The ending inventory account balance at December 31, 2013, did not include goods sold and shipped on December 30, 2013, FOB destination. The selling price of these goods was $40,000 and the cost of these goods was $32,000. The goods arrived at the destination on January 4, 2014. All purchases and sales of inventory were recorded in the correct fiscal year. Instructions (a) Calculate the correct amount for each of the following for 2014, 2013, and 2012: 1. Total assets 2. Owner's equity 3. Cost of goods sold…