Problem 9-15 (Static) 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 $6,000. b. Inventory at December 31, 2020, was overstated by $9.000. c. On December 31, 2020, Inventory was purchased for $3,000. The company did not record the purchase until the Inventory was pald 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. Required 1 Required 2 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.) 2019 2020 Ending inventory Cost of goods sold Net income Retained earnings Effect Amount < Required 1 Effect Amount Required 2 >
Problem 9-15 (Static) 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 $6,000. b. Inventory at December 31, 2020, was overstated by $9.000. c. On December 31, 2020, Inventory was purchased for $3,000. The company did not record the purchase until the Inventory was pald 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. Required 1 Required 2 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.) 2019 2020 Ending inventory Cost of goods sold Net income Retained earnings Effect Amount < Required 1 Effect Amount Required 2 >
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 71APSA: Effects of an Inventory Error The income statements for Graul Corporation for the 3 years ending in...
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Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a journal entry to correct the errors. (If no entry is required for a transaction/event, select "No journal entry required" in the
first account field.)
View transaction list
Journal entry worksheet
1
Record the entry to correct inventory valuation.
Note: Enter debits before credits.
Transaction
1
Record entry
General Journal
Clear entry
Required 1
Debit
Credit
View general Journal
Required 7
![Problem 9-15 (Static) 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 $6,000.
b. Inventory at December 31, 2020, was overstated by $9,000.
c. On December 31, 2020, Inventory was purchased for $3,000. 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.
Required 1 Required 2
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.)
2019
2020
Ending inventory
Cost of goods sold
Net income
Retained earnings
Effect
Amount
< Required 1
Effect
Amount
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F567e5c76-a71a-4e3b-b67f-acaa9766611e%2Fc9e47ec5-3427-423c-9ddf-6d0f77f7672f%2Fcs2tbjf_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 9-15 (Static) 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 $6,000.
b. Inventory at December 31, 2020, was overstated by $9,000.
c. On December 31, 2020, Inventory was purchased for $3,000. 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.
Required 1 Required 2
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.)
2019
2020
Ending inventory
Cost of goods sold
Net income
Retained earnings
Effect
Amount
< Required 1
Effect
Amount
Required 2 >
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