Scruffy Brothers Supply does a physical inventory count when the business is closed at the end of each quarter. At the end of the first quarter in 2020 Scuffy Brothers Supply discovers that it has overvalued their inventory due to an honest miscounting error by $150,000. In other words, the value of their inventory was overstated by $150,000. Make the necessary entries to correct this error at the end of the quarter. Think through the impact this incorrect valuation has on the company's financial statements and make the necessary adjusting entries: (a) Debits Credits (b) Debits Credits

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Scruffy Brothers Supply does a physical inventory count when the business is closed at the end of each
quarter. At the end of the first quarter in 2020 Scuffy Brothers Supply discovers that it has overvalued
their inventory due to an honest miscounting error by $150,000. In other words, the value of their
inventory was overstated by $150,000. Make the necessary entries to correct this error at the end of
the quarter. Think through the impact this incorrect valuation has on the company's financial
statements and make the necessary adjusting entries:
(a) Debits
Credits
(b) Debits
Credits
Transcribed Image Text:Scruffy Brothers Supply does a physical inventory count when the business is closed at the end of each quarter. At the end of the first quarter in 2020 Scuffy Brothers Supply discovers that it has overvalued their inventory due to an honest miscounting error by $150,000. In other words, the value of their inventory was overstated by $150,000. Make the necessary entries to correct this error at the end of the quarter. Think through the impact this incorrect valuation has on the company's financial statements and make the necessary adjusting entries: (a) Debits Credits (b) Debits Credits
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