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 20X0. 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 JournalDebitCredit2 of 7Next>

Inventory Error CorrectionEnding inventory affects the cost of goods sold (COGS) and, consequently,…

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?
None
Candle Co. performs an inventory court at year - end. The company records a ending balance of $56,000 for inventory on its balance sheet. During the following year, the accountant discovers that the ending inventory was miscounted, causing ending inventory to be overstated by $2, 500. a. What is the effect of the misstatement on the income statement? b. Besides ending inventory, what was the effect of the error on the balance sheet?
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
At the beginning of the year Candle Co. has an inventory balance of $32,000. The company has net income for the year of $56,000. Later, the accountant discovers an error that caused the beginning invenotory to be understated by $6,000. a. Assuming no other changes, what is the correct net income for the year? b. If the error was discovered after year-end, what was the effect of the error on the balance sheet? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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…
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…
sharad
Lindy Company's auditor discovered two errors. No errors were corrected during 2017. The errors are described as follows: (1.) Merchandise costing $4,200 was sold to a customer for $9,200 on December 31, 2017, but it was recorded as a sale on January 2, 2018. The merchandise was properly excluded from the 2017 ending inventory. Assume the periodic inventory system is used. (2.) A machine with a five-year life was purchased on January 1, 2017. The machine cost $22,000 and has no expected salvage value. No depreciation was taken in 2017 or 2018. Assume the straight-line method for depreciation. Required:Prepare appropriate journal entries (assume the 2018 books have not been closed). Ignore income taxes.
The following are independent errors made by a company that uses a periodic inventory system: Failure to record a purchase of $10,000 inventory on credit; however, inventory was properly counted at the end of the period. Assume the error was discovered prior to any payment for the purchase. Expensed the purchase of a machine of $50,000. The machine has a 10 year useful life with no salvage value. Failure to accrue wages of $8,000. Wages had not been paid at the time the error was discovered. Failure to record an allowance for uncollectibles of $25,000. The error was discovered prior to the accrual for bad debt in the following year. Included collections in advance of $100,000 as revenue. Included payments of $12,000 advance as expenses. Failure to accrue warranty costs of $14,000. Failure to record depreciation expense of $6,000 on assets purchased during the year. Required: Prepare the correcting journal entries if the company discovers each error in the year after it is made.…

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