None Tack, Inc., reported a Retained earnings balance of $150,000 at December 31, 20X0. In June 20X1, Tack's internal audit staffdiscovered two errors that were made in preparing the 20X0 financial statements that are considered material:a. Merchandise costing $40,000 was mistakenly omitted from the 20X0 ending inventory.b. Equipment purchased on July 1, 20X0, for $70,000 was mistakenly charged to a repairs expense account. The equipment shouldhave been capitalized and depreciated using straight-line depreciation, a 10-year useful life, and $10,000 salvage value.Required:1. Prepare the journal entry Tack would make in 20X1 to correct the errors made in 20XO. Assume depreciation for 20X1 is made as ayear-end adjusting entry. (Ignore taxes.) (If no entry is required for a particular transaction, select "No journal entry required" inthe first account field.)View transaction listJournal entry worksheet<1Record the entry to correct the errors made in 20X0.Note: Enter debits before credits.Transaction20X1General JournalDebitCreditNext>

Tack, Inc. - Journal Entries for 20X1 CorrectionsTo correct the errors made in 20X0, Tack, Inc. will…

Answered: Tack, Inc., reported a Retained…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 15EB: Tanke Company reported net income on the year-end financial statements of $850,200. However, errors...

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Suppose that an audit of Prime Sports Gear encountered the following two errors: a. Inventory totaling 4,500 should have been written off as worthless at the end of the year. Year-end inventory should be only 195,600. Net income is reduced to 117,110. b. Checks totaling 20,000 for some of the salaries payable at year-end had in fact been written and mailed out on December 31, 2013. Thus, both the cash account and the salaries payable account are overstated at year-end. Correct both errors on the worksheet. Save your completed file as CASHFLOW4. Print the worksheet when done. What impact did each of these adjustments have on cash flow for 2013?
If Wakowski Companys ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any?
Shetland Company reported net income on the year-end financial statements of $125,000. However, errors in inventory were discovered after the reports were issued. If inventory was understated by $15,000, how much net income did the company actually earn?
Tack, Inc., reported a Retained earnings balance of $150,000 at December 31, 20X0. In June 20X1, Tack's internal audit staff discovered two errors that were made in preparing the 20X0 financial statements that are considered material: a. Merchandise costing $40,000 was mistakenly omitted from the 20X0 ending inventory. b. Equipment purchased on July 1, 20X0, for $70,000 was mistakenly charged to a repairs expense account. The equipment should have been capitalized and depreciated using straight-line depreciation, a 10-year useful life, and $10,000 salvage value. Required: 1. Prepare the journal entry Tack would make in 20X1 to correct the errors made in 20X0. Assume depreciation for 20X1 is made as a year-end adjusting entry. (Ignore taxes.) (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet
Henson company had determined the 2019 and 2020 net income to be 4,000,000 and 5,000,000 respectively. In a first time audit of the financial statements, the following errors are discovered: Merchandise inventory was incorrectly determined - 50,000 overstatement for 2019 and 150,000 overstatement for 2020 Revenues received in advance in 2019 of 300,000 was credited to be a revenue account when received. Of the total 50,000 was earned in 2019, 200,000 was earned in 2020 and the remainder will be earned in 2021. 400,000 gain on sale of plant asset in 2020 was erroneously credited to retained earnings. What is the corrected net income for 2020? a. 5,500,000 b.5,450,000 c.5,400,000 d.5,550,000
The records of Thomas Company as of December 31, 2020, show the following: The accountant of Thomas Company discovers in the first week of January 2021 that the following errors were made by his staff. a. Goods costing $4.500 were in transit (FOB shipping point) and were not included in the ending inventory. The invoice had been received and the purchase recorded. b. Damaged goods (cost $4,100) that were being held for return to the supplier were included in inventory. The goods had been recorded as a purchase and the entry for the return of these goods had also been made. c. Inventory items costing $3,900 were incorrectly excluded from the final inventory. These goods had not been recorded as a purchase and had not been paid for by the company. d. Goods that were shipped FOB destination had not yet arrived and were not included in inventory. However, the invoice had arrived on December 30, 2020, and the purchase for $2,700 was recorded. e. Goods that cost $2.400 were segregated and…
E6-2 Farley Bains, an auditor with Nolls CPAS, is performing a review of Ryder Company's Inventory account. Ryder did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount. 1. Included in the company's count were goods with a cost of $228,000 that the is holding on consignment. The goods belong to Nader Corporation. 2. The physical count did not include goods purchased by Ryder with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Ryder's warehouse until January 3. 3. Included in the Inventory account was $17,000 of office supplies that were stored in the warehouse and were to be used by the company's supervisors and managers dur- ing the coming year. 4. The company received an order on December 29 that was boxed and was sitting on the loading dock awaiting…
During the course of the Year 2 audit of Chester Co., the auditor discovered potential cutoff problems that may or may not require adjusting journal entries. For each of the potential cutoff problems indicated below, complete the required journal entries. To prepare each required journal entry: 1. The company shipped merchandise with a carrying amount of $75,000 FOB destination on December 23, Year 2, and recorded the sale and relief of inventory on that date. The customer received the merchandise on December 31, Year 2. The merchandise has a gross profit margin of 10%. Record the necessary Year 2 adjustments, if any. 2. The company shipped merchandise with a carrying amount of $45,000 to a consignee on December 24, Year 2, and recorded the sale and the relief of inventory on that date. The consignee had not sold the merchandise as of January 5, Year 3. The merchandise has a gross profit margin of 10%. Record the necessary Year 2 adjustments, if any. 3. At the beginning of Year 2, the…
Farley Bains, an auditor with Nolls CPAs, is performing a review of Ryder Company’s Inventory account. Ryder Company did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount. Included in the company’s count were goods with a cost of $228,000 that the company is holding on consignment. The goods belong to Nader Corporation. The physical count did not include goods purchased by Ryder Company with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Ryder Company’s warehouse until January 3. Included in the Inventory account was $17,000 of office supplies that were stored in the warehouse and were to be used by the company’s supervisors and managers during the coming year. The company received an order on December 29 that was boxed and was sitting on the…
Farley Bains, an auditor with Nolls CPAs, is performing a review of Teal Mountain Inc.’s Inventory account. Teal Mountain Inc. did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $808,200. However, the following information was not considered when determining that amount. Ending inventory-as reported $enter a dollar amount 1. Included in the company’s count were goods with a cost of $224,170 that the company is holding on consignment. The goods belong to Nader Corporation. enter a dollar amount 2. The physical count did not include goods purchased by Teal Mountain Inc.with a cost of $38,530 that were shipped FOB shipping point on December 28 and did not arrive at Teal Mountain Inc.’s warehouse until January 3. enter a dollar amount 3. Included in the Inventory account was $18,300 of office supplies that were stored in the…
Detection of Errors and Fraud. For each of the following independent events, indicate the (1) effect of the error or fraud on the financial statements and (2) what auditing procedures could have detected the misstatement resulting from error or fraud.a. The physical inventory count of J. Payne Enterprises, which has a December 31 year-end, was conducted on August 31 without incident. In September, the perpetual inventory was not reduced for the cost of sales.b. Holmes Drug Stores counted its inventory on December 31, which is its fiscal year-end. The auditors observed the count at 20 of Holmes’s 86 locations. The company falsified the inventory at 20 of the locations not visited by the auditors by including fictitious goods in the counts.c. Pope Automotive inadvertently included in its inventory automobiles that it was holding on consignment for other dealers.d. Peffer Electronics Inc. overstated its inventory by pricing wiring at $200 per hundred feet instead of $200 per thousand…
Morena Co. uses the calendar year basis of accounting. The following date were found during your audit. Goods in transit shipped FOB Destination by a supplier in the amount of P20,000 had been excluded from the inventory, and further testing revealed that the purchase had been recorded. Goods costing P1,000 had been received, included in the inventory and recorded as a purchase. However, upon inspection the goods were found to be defective and would be immediately returned. Materials costing P55,000 and billed on December 30 at a selling price of P64,000 had been segregated in the warehouse for shipment to a customer. the material had been excluded from inventory as a signed purchase order had been received from the customer. Term, FOB Destination. Goods costing P41,000 was out on consignment with JRS. Since the monthly statement from JRS listed those materials as on hand, the items had been excluded from the final inventory and invoiced on Dec 31 at P16,000. The sale of P30,000 worth…

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