The December 31, 2024, 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 2025. Another supplier shipment costing $20,000 was correctly recorded as a purchase in 2024. However, the merchandise, shipped FOB shipping point, was not received until 2025 and was incorrectly omitted from the physical count. A third purchase, shipped from a supplier FOB shipping point on December 28, 2024, did not arrive until January 3, 2025. 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, 2024, inventory balance and, assuming that the errors were discovered after the 2024 financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a journal entry to correct the errors. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list View journal entry worksheet No Transaction General Journal 1 1 Retained earnings Inventory Accounts payable Durchesce Debit Credit 30,000 100,000
The December 31, 2024, 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 2025. Another supplier shipment costing $20,000 was correctly recorded as a purchase in 2024. However, the merchandise, shipped FOB shipping point, was not received until 2025 and was incorrectly omitted from the physical count. A third purchase, shipped from a supplier FOB shipping point on December 28, 2024, did not arrive until January 3, 2025. 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, 2024, inventory balance and, assuming that the errors were discovered after the 2024 financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a journal entry to correct the errors. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. View transaction list View journal entry worksheet No Transaction General Journal 1 1 Retained earnings Inventory Accounts payable Durchesce Debit Credit 30,000 100,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The December 31, 2024, 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 2025. Another supplier shipment costing $20,000 was correctly recorded as a purchase in 2024. However, the
merchandise, shipped FOB shipping point, was not received until 2025 and was incorrectly omitted from the physical count. A third
purchase, shipped from a supplier FOB shipping point on December 28, 2024, did not arrive until January 3, 2025. 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, 2024, inventory balance and, assuming that the errors were discovered after the 2024
financial statements were issued, analyze the effect of the errors on 2024 cost of goods sold, net income, and retained earnings.
(Ignore income taxes.)
2. Prepare a journal entry to correct the errors.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a journal entry to correct the errors.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
View transaction list
View journal entry worksheet
No
Transaction
General Journal
1
1
Retained earnings
Inventory
Accounts payable
Purchases
Debit
Credit
30,000
100,000
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