The December 31, 2024, inventory of Tog Company, based on a physical count, was determined to be $465,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $65,000. The purchase was recorded and paid for in 2025. Another supplier shipment costing $27,500 was correctly recorded as a purchase in 2024. However, the merchandise, shipped FOB shipping point, was not received until 2025 and was incorrectly omitted from the physical count. A third purchase, shipped from a supplier FOB shipping point on December 28, 2024, did not arrive until January 3, 2025. The merchandise, which cost $95,000, was not included in the physical count and the purchase has not yet been recorded.The company uses a periodic inventory system.Required:Determine the correct December 31, 2024, inventory balance and, assuming that the errors were discovered after the 2024 financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained earnings. (Ignore income taxes.)Prepare a journal entry to correct the errors. Required 1 Required 2Prepare a journal entry to correct the errors.Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.View transaction listJournal entry worksheet1Record the entry to correct inventory valuation.Note: Enter debits before credits.Transaction1Record entryGeneral JournalClear entryDebitCreditView general journal> Required 1 Required 2Determine the correct December 31, 2024, inventory balance and, assuming that the errors were discovered after the 2024financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retainedearnings. (Ignore income taxes.)Correct ending inventoryCost of goods soldNet incomeRetained earningsEffectAmount

The inventory that is sold or distributed and that has been purchased as finished goods or requires…

Answered: Required: Determine the correct…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Required:

Determine the correct December 31, 2024, inventory balance and, assuming that the errors were discovered after the 2024 financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained earnings. (Ignore income taxes.)
Prepare a journal entry to correct the errors.

Required 1 Required 2
Determine the correct December 31, 2024, inventory balance and, assuming that the errors were discovered after the 2024
financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained
earnings. (Ignore income taxes.)
Correct ending inventory
Cost of goods sold
Net income
Retained earnings
Effect
Amount

Expert Solution

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions