Taking Iventory At the end of the last fiscal period, er counted all merchandise on hand. How was missed when the inventory was tak not included in the ending inventory fi Questions 1. What effect has this error on the in sheet this year? 2. If the error went undiscovered, wc year be too high or too low? 3. Over the two-year period, what is (assuming the second year's inven 4. Is the owner's equity total correct balance sheet? Explain your answ
Taking Iventory At the end of the last fiscal period, er counted all merchandise on hand. How was missed when the inventory was tak not included in the ending inventory fi Questions 1. What effect has this error on the in sheet this year? 2. If the error went undiscovered, wc year be too high or too low? 3. Over the two-year period, what is (assuming the second year's inven 4. Is the owner's equity total correct balance sheet? Explain your answ
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![income tax?
Taking Inventory
At the end of the last fiscal period, employees for Trans-Canada Distributors
counted all merchandise on hand. However, a complete section of the warehouse
was missed when the inventory was taken. The cost of the merchandise that was
not included in the ending inventory figure was $7500.
Questions
1. What effect has this error on the income statement and on the balance
sheet this year?
2. If the error went undiscovered, would the net income in the second
year be too high or too low?
3. Over the two-year period, what is the total error in the net income
(assuming the second year's inventory is done correctly)?
4. Is the owner's equity total correct or incorrect in the second-year
balance sheet? Explain your answer.
©P](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F523dffa5-c96d-4e74-8377-f5946452aa57%2Fbcd34c08-96ee-4f28-be62-c11c963a2d03%2Feguzrgr.jpeg&w=3840&q=75)
Transcribed Image Text:income tax?
Taking Inventory
At the end of the last fiscal period, employees for Trans-Canada Distributors
counted all merchandise on hand. However, a complete section of the warehouse
was missed when the inventory was taken. The cost of the merchandise that was
not included in the ending inventory figure was $7500.
Questions
1. What effect has this error on the income statement and on the balance
sheet this year?
2. If the error went undiscovered, would the net income in the second
year be too high or too low?
3. Over the two-year period, what is the total error in the net income
(assuming the second year's inventory is done correctly)?
4. Is the owner's equity total correct or incorrect in the second-year
balance sheet? Explain your answer.
©P
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