The December 31, 2024, inventory of Tog Company, based on a physical count, was determined to be $459,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $59,000. The purchase was recorded and paid for in 2025. Another supplier shipment costing $24,500 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 $89,000, 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.
The December 31, 2024, inventory of Tog Company, based on a physical count, was determined to be $459,000. Included in that count was a shipment of goods received from a supplier at the end of the month that cost $59,000. The purchase was recorded and paid for in 2025. Another supplier shipment costing $24,500 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 $89,000, 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:The December 31, 2024, inventory of Tog Company, based on a physical count, was determined to be $459,000. Included in that
count was a shipment of goods received from a supplier at the end of the month that cost $59,000. The purchase was recorded
and paid for in 2025. Another supplier shipment costing $24,500 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 $89,000, 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
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.)
Correct ending inventory
Cost of goods sold
Net income
Retained earnings
Effect
Amount
< Required 1
Required 2
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