Sales revenue First Quarter $ 15,800 Second Quarter $21,300 Cost of goods sold Beginning inventory Purchases $ 5,200 $ 4,700 3,800 13,200 Goods available for sale 9,000 17,900 Ending inventory 4,700 10,000 Cost of goods sold Gross profit 4,300 11,500 7,900 13,400 Expenses 6,300 Pretax income 5,800 $ 5,700 $ 7,100 During the third quarter, it was discovered that the ending Inventory for the first quarter should have been $5,180. Required: 1. What effect did this error have on the combined pretax Income of the two quarters? 2. Which quarter's or quarters' (if any) EPS amounts were affected by this error? 3. Prepare corrected Income statements for each quarter. 4. Prepare the schedule to reflect the comparative effects of the correct and Incorrect amounts on the Income statement. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement. 1st Quarter 2nd Quarter Incorrect Correct Error Beginning inventory S 5,200 $ 5,200 0 No error Ending inventory 4,700 5,180 $ 480 under Incorrect $ 4,700 10,000 Correct Error S 5,180 S 10,000 480 0 under No error Cost of goods sold 4,300 3,820 480 over 7,900 7,420 480 under Gross profit 11,500 11,680 x 480 under 13,400 13,580 x 480 over Pretax income 5,700 5,880 x 480 under 7,100 7,280 x 480 over
Sales revenue First Quarter $ 15,800 Second Quarter $21,300 Cost of goods sold Beginning inventory Purchases $ 5,200 $ 4,700 3,800 13,200 Goods available for sale 9,000 17,900 Ending inventory 4,700 10,000 Cost of goods sold Gross profit 4,300 11,500 7,900 13,400 Expenses 6,300 Pretax income 5,800 $ 5,700 $ 7,100 During the third quarter, it was discovered that the ending Inventory for the first quarter should have been $5,180. Required: 1. What effect did this error have on the combined pretax Income of the two quarters? 2. Which quarter's or quarters' (if any) EPS amounts were affected by this error? 3. Prepare corrected Income statements for each quarter. 4. Prepare the schedule to reflect the comparative effects of the correct and Incorrect amounts on the Income statement. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement. 1st Quarter 2nd Quarter Incorrect Correct Error Beginning inventory S 5,200 $ 5,200 0 No error Ending inventory 4,700 5,180 $ 480 under Incorrect $ 4,700 10,000 Correct Error S 5,180 S 10,000 480 0 under No error Cost of goods sold 4,300 3,820 480 over 7,900 7,420 480 under Gross profit 11,500 11,680 x 480 under 13,400 13,580 x 480 over Pretax income 5,700 5,880 x 480 under 7,100 7,280 x 480 over
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Sales revenue
First Quarter
$ 15,800
Second Quarter
$21,300
Cost of goods sold
Beginning inventory
Purchases
$ 5,200
$ 4,700
3,800
13,200
Goods available for sale
9,000
17,900
Ending inventory
4,700
10,000
Cost of goods sold
Gross profit
4,300
11,500
7,900
13,400
Expenses
6,300
Pretax income
5,800
$ 5,700
$ 7,100
During the third quarter, it was discovered that the ending Inventory for the first quarter should have been $5,180.
Required:
1. What effect did this error have on the combined pretax Income of the two quarters?
2. Which quarter's or quarters' (if any) EPS amounts were affected by this error?
3. Prepare corrected Income statements for each quarter.
4. Prepare the schedule to reflect the comparative effects of the correct and Incorrect amounts on the Income statement.
Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2 Required 3
Required 4
Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement.
1st Quarter
2nd Quarter
Incorrect
Correct
Error
Beginning inventory
S 5,200 $ 5,200
0
No error
Ending inventory
4,700
5,180
$
480
under
Incorrect
$ 4,700
10,000
Correct
Error
S 5,180 S
10,000
480
0
under
No error
Cost of goods sold
4,300
3,820
480
over
7,900
7,420
480
under
Gross profit
11,500
11,680 x
480
under
13,400
13,580 x
480
over
Pretax income
5,700
5,880 x
480
under
7,100
7,280 x
480
over
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