The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to be $450,000.Included in that count was a shipment of goods received from a supplier at the end of the month that cost$50,000. The purchase was recorded and paid for in 2019. Another supplier shipment costing $20,000 was correctly recorded as a purchase in 2018. However, the merchandise, shipped FOB shipping point, was not receiveduntil 2019 and was incorrectly omitted from the physical count. A third purchase, shipped from a supplierFOB shipping point on December 28, 2018, did not arrive until January 3, 2019. The merchandise, which cost$80,000, was not included in the physical count and the purchase has not yet been recorded.The company uses a periodic inventory system.Required:1. Determine the correct December 31, 2018, inventory balance and, assuming that the errors were discoveredafter the 2018 financial statements were issued, analyze the effect of the errors on 2018 cost of goods sold,net income, and retained earnings. (Ignore income taxes.)2. Prepare a journal entry to correct the errors.
The December 31, 2018, inventory of Tog Company, based on a physical count, was determined to be $450,000.
Included in that count was a shipment of goods received from a supplier at the end of the month that cost
$50,000. The purchase was recorded and paid for in 2019. Another supplier shipment costing $20,000 was correctly recorded as a purchase in 2018. However, the merchandise, shipped FOB shipping point, was not received
until 2019 and was incorrectly omitted from the physical count. A third purchase, shipped from a supplier
FOB shipping point on December 28, 2018, did not arrive until January 3, 2019. The merchandise, which cost
$80,000, was not included in the physical count and the purchase has not yet been recorded.
The company uses a periodic inventory system.
Required:
1. Determine the correct December 31, 2018, inventory balance and, assuming that the errors were discovered
after the 2018 financial statements were issued, analyze the effect of the errors on 2018 cost of goods sold,
net income, and
2. Prepare a
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