The draft accounts of Collister Co. for the year ended 31st Dec 2020 include  the following: Revenue $80,000 Gross profit $20,000 It was subsequently discovered that revenue had been understated by  $10,000 and closing inventory overstated by $5,000. After correction of these errors the gross profit percentage margin will be (to 1  d.p.)?

Q: A company's correct ending balance for the inventory account at the end of 2021 should be $5,000,…

A: Ending inventory of 2021 is understated by $2,000. This means beginning inventory of 2022 is also…

Q: Whispering Enterprises reported cost of goods sold for 2020 of $1,515,400 and retained earnings of…

A: The error can be rectified by deducting an opening overstated inventory error to the cost of goods…

Q: Tim Mattke Company began operations in 2018 and for simplicity reasons, adopted weighted-average…

A: a.

Q: During 2024, WMC Corporation discovered that its ending inventories reported in its financial…

A: Ending inventory is one of the important current asset in the business. This is also part of income…

Q: When you undertook the preparation of the financial statements for Cullumber Company at January 31,…

A: The inventory is a part of the working capital, the entity holds inventory to make sales. Inventory…

Q: In 2021, the internal auditors of Development Technologies, Inc., discovered that a $4.5 million…

A: Journal entries are the primary method for recording financial transactions in the books of…

Q: When you undertook the preparation of the financial statements for Crane Company at January 31,…

A: The retail method for ending inventory valuation is a technique used to estimate the value of ending…

Q: The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost…

A: Calculation of COGS under FIFO method As per FIFO Method: Particulars Units Cost per unit Total…

Q: During 2016, WMC Corporation discovered that its ending inventories reported on its financial…

A: 1.

Q: During 2024, Lipe and Lipe Corporation discovered that its ending inventories reported on its…

A: Req 1B:Determine the effect of 2023 errors on retained earnings at January 1, 2024, before any…

Q: Karen Company reported net incomes for a three-year period as follows: 2019, $191,800; 2020,…

A: When ending inventory is overstated , it will result in over statement of net profit , therefore to…

Q: Malcolm Lee Industries reported the following amounts in its December 31st financial statements:…

A: Understated closing inventory decreases the amount of the current year’s profit whereas overstated…

Q: Two or more items are omitted in each of the following tabulations of income statement data. Fill in…

A: Income statement is a financial statement prepared at the end of an accounting year to calculate the…

Q: Scenario 1:Rocky Inc hired a new intern from CSU to help with year-end inventory. The intern…

A: The objective of the question is to determine the effect of an error in inventory calculation on the…

Q: (a) Compute the total effect of the errors on 2021 net income.

A: Accounting errors occur at the time of recording data by accounting professionals. This does not…

Q: The following information was available for Swifty Company at December 31, 2020: beginning inventory…

A: Lets understand the basics. Inventory turnover ratio indicates how many times entity turns its…

Q: What is the net effect of the errors in FIERY’s December 31 retained earnings balance? A.…

A: Retained earning means the amount left in business after paying all expenses and dividend to…

Q: The management of Swifty Inc. Is reevaluating the appropriateness of using its present Inventory…

A: As per the FIFO (First in first out) method the inventory which comes first will out first, hence in…

Q: Galliger Corp.'s adjusted trial balance at December 31, 2023, included the following: Credit…

A: Note: Loss from discontinued division won't be considered for this calculation

Q: A markup of 25 percent on cost is equivalent to what markup on selling price? (rounded)  choices: 33…

A: Solution 1: Let cost = 100 Markup = 100*25% = 25 Selling price = 100 + 25 = 125

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.