Problem 9-15 (Algo) Inventory errors [LO9-7] You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2021, you discover the following errors related to the 2019 and 2020 financial statements a. Inventory at December 31, 2019, was understated by $6,500. b. Inventory at December 31, 2020, was overstated by $9,500 c. On December 31, 2020, inventory was purchased for $3,500. The company did not record the purchase until the inventory was paid for early in 2021. At that time, the purchase was recorded by a debit to purchases and a credit to cash. The company uses a periodic inventory system. Required: 1. Assuming that the errors were discovered after the 2020 financial statements were issued, analyze the effect of the errors on 2020 and 2019 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors. Complete this question by entering your answers in the tabs below.

Problem 9-15 (Algo) Inventory errors [LO9-7] You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2021, you discover the following errors related to the 2019 and 2020 financial statements a. Inventory at December 31, 2019, was understated by $6,500. b. Inventory at December 31, 2020, was overstated by $9,500 c. On December 31, 2020, inventory was purchased for $3,500. The company did not record the purchase until the inventory was paid for early in 2021. At that time, the purchase was recorded by a debit to purchases and a credit to cash. The company uses a periodic inventory system. Required: 1. Assuming that the errors were discovered after the 2020 financial statements were issued, analyze the effect of the errors on 2020 and 2019 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors. Complete this question by entering your answers in the tabs below.

Name: Required 1 Required 2Assuming that the errors were discovered after t
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Description: Required 1 Required 2Assuming that the errors were discovered after the 2020 financial statements were issued, analyze the effect of the errors on2020 and 2019 cost of goods sold, net income, and retained earnings. (Ignore income taxes.)MANAEnding i

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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Current Attempt in Progress Cullumber Company began operations on January 1, 2024, adopting the conventional retail inventory system. None of the company's merchandise was marked down in 2024 and, because there was no beginning inventory, its ending inventory for 2024 of $31,248 would have been the same under either the conventional retail system or the LIFO retail system. On December 31, 2025, the store management considers adopting the LIFO retail system and desires to know how the December 31, 2025, inventory would appear under both systems. All pertinent data regarding purchases, sales, markups, and markdowns are shown below. There has been no change in the price level. Cost Retail Inventory, Jan. 1, 2025 $31,248 $50,400 Markdowns (net) 10,920 Markups (net) 18,480 Purchases (net) 109,960 149,520 Sales (net) 140,280 Determine the cost of the 2025 ending inventory under both (a) the conventional retail method and (b) the LIFO retail method. (Round ratios for computational purposes to…
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Current Attemptin rrugress The net income per books of Kimberly Young Company was determined without knowledge of the errors indicated below. Year 2020 2021 2022 2023 2024 2025 Year 2020 2021 Net Income per Books 2022 $49,000 51,060 53,170 55,090 56,960 58,850 Error in Ending Inventory Net Income Per Books Overstated Overstated Understated No error Understated Overstated Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. $49,000 51,060 53,170 $ $2,700 O Search 8,370 11,680 1,890 8,620 Overstatement Jan. 1 $ Errors in Inventories Understatement Jan. 1 DELL) | $ Overstatement Dec. 31
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