Please do 4.2.1 . Please show working out
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
It is not incomplete! Please do 4.2.1 .
Please show working out
Expert Solution
Step 1
When physical stock take is done on the closing date of the financial year, the Inventory as on year end has to be valued according to the stock take.
If there are any discrepancies in value of inventory in unadjusted trial balance and value as per stock take, the difference has to be removed. For eg, if the inventory is value higher as per atock take, inventory is to be recorded at higher amount. The increased ending balance of Inventory will simultaneously increase the Gross Profit in Profit or Loss A/c.
Hence, the Shareholder's Equity and Assets will both be increased by the revaluation amount and balance sheet will match.
Refer step 2 for Notes to Financial Statements.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education