The following errors were discovered on the books of Nash Corporation, during the 2024 year-end process, prior to the books beingclosed for the year.Prepare the journal entries required to correct the below errors, assuming that Nash follows IFRS and has a perpetual inventorysystem. For this question, ignore income tax.(a)While conducting the year-end inventory count in December 2024, it was discovered that $7,400 of product was omitted fromthe December 2023 inventory count. The product had been shipped to a customer early in 2024, but had not been included in the2023 ending inventory. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entryis required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.)

The objective of this question is to correct the error in the inventory count of Nash Corporation…

Answered: The following errors were discovered on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lime Supplies had a miscount of inventory at $22,000 for the year end May 31, 2022. The correct amount should have been $25,000. If this error was never corrected, and assuming the inventory count was correct for 2023, how much would this error impact the cost of goods sold in 2022? Select one: a. Not impacted at all. b. $3,000 overstated c. $ 47,000 understated d. $3,000 understated
Vader Corporation made two errors in counting inventory: Ending inventory for 2019 was overstated by $15,000, and ending inventory for 2020 was understated by $12,000. If neither error was corrected, what will be the error (before taxes) in 2020 net income? a.Overstated $27,000. b.Understated $27,000. c.Overstated $3,000. d.Understated $3,000.
The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost method to the FIFO cost method at the beginning of 2024. At December 31, 2023, inventories were $122,000 (average cost basis) and were $126,000 a year earlier. Cecil-Booker's accountants determined that the inventories would have totaled $159,000 at December 31, 2023, and $164,000 at December 31, 2022, if determined on a FIFO basis. A tax rate of 25% is in effect for all years. One hundred thousand common shares were outstanding each year. Income from continuing operations was $420,000 in 2023 and $545,000 in 2024. There were no discontinued operations either year. Required: 1. Prepare the journal entry at January 1, 2024, to record the change in accounting principle. (All tax effects should be reflected in the deferred tax liability account.) 2. Prepare the 2024-2023 comparative income statements beginning with income from continuing operations (adjusted for any revisions). Include per share…
Tim Company has following information related to its financial statements in 2021: (1) Tim changed inventory cost methods to weighted-average method from LIFO at the end of 2020 for both financial statement and income tax purposes. The change will cause a $80,000 increase in the beginning inventory on January 1, 2021. (2) The physical inventory count on December 31, 2020, improperly double counted (overstated) merchandise costing $12,000 that had been temporarily stored in a public warehouse. Tim uses a periodic inventory system. (3) Effective January 1, 2021, the company changed the salvage value used in calculating depreciation for its factory. The factory cost $ 800,000 on January 1, 2011 and has been depreciated on a straight-line basis assuming a useful life of 40 years and a salvage value of $200,000. New evidence indicates that the salvage value will be no more than $50,000. (4) A collection of $4,000 on account from a customer received on December 31, 2021, was not…
The following errors were discovered in the preparation of the financial statements of Uni-Focus Company for the year ended November 30, 2021. Goods held on consignment from Tri-Facet Ltd. with a cost of $17,940 were incorrectly included in Uni-Focus Company’s inventory on November 30, 2020. The goods were not sold during the 2021 year and were returned to Tri-Facet. The goods were not included in Uni-Focus Company’s November 30, 2021 inventory count. Assume that Uni-Focus Company’s Inventory account accurately reflects the results of the November 30, 2021 count. During the first week of December 2017, office furniture was purchased for $18,505. The entire purchase was recorded with a debit to Office Supplies Expense, and a credit to Cash. Uni-Focus expected to keep the furniture for 10 years and sell it for $675 at the end of the asset’s useful life. Uni-Focus Company uses the straight-line method of depreciation for furniture. On December 1, 2019, Uni-Focus Company paid an…
Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is understated by $61,000 and Year 2 ending inventory is overstated by $31,000. For Year Ended December 31 Year 1 Year 2 Year 3 $ 736,000 $ 966,000 $801,000 (a) Cost of goods sold (b) Net income (c) Total current assets 286,000 261,000 1,241,000 1,258,000 1,371,000 (d) Total equity 1,398,000 1,591,000 1,256,000 279,000 Required: 1. For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors?
In 2016, the internal auditors of Development Technologies, Inc. discovered that a $4 million purchase of merchandise in 2016 was recorded in 2015 instead. The physical inventory count at the end of 2015 was correct. Required: Prepare the journal entry needed in 2016 to correct the error. Also, briefly describe any other measures Development Technologies would take in connection with correcting the error. (Ignore income taxes.)
Subject - account Please help me. Thankyou.
What are those three empty cells, and what is the correct journal entry?
In your audit of James Smith Company, you find that a physical inventory on December 31, 2020, showed merchandise with a cost of $449,390 was on hand at that date. You also discover the following items were all excluded from the $449,390. 1. 2. 3. 4. 5. Merchandise of $61,150 which is held by Smith on consignment. The consignor is the Max Suzuki Company. Merchandise costing $36,420 which was shipped by Smith f.o.b. destination to a customer on December 31, 2020. The customer was expected to receive the merchandise on January 6, 2021. Merchandise costing $47,720 which was shipped by Smith f.o.b. shipping point to a customer on December 29, 2020. The customer was scheduled to receive the merchandise on January 2, 2021. Merchandise costing $83,030 shipped by a vendor f.o.b. destination on December 30, 2020, and received by Smith on January 4, 2021. Merchandise costing $49,200 shipped by a vendor f.o.b. shipping point on December 31, 2020, and received by Smith on January 5, 2021. Based on…
During 2011, Paul discovered that the ending inventories reported on its financial statements were incorrect by the following amounts: 2009 P60,000 understated; 2010 P75,000 overstated. Paul uses the periodic inventory system to ascertain year-end quantities that are converted to peso amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income tax, Paul’s retained earnings at January 1, 2011 would be Choices; Correct 15,000 overstated 75,000 overstated 135,000 overstated
Skysong Limited is trying to determine the value of its ending inventory as of February 28, 2020, the company’s year-end. The following transactions occurred, and the accountant asked your help in determining whether they should be recorded or not.For each of the transactions below, specify whether the item in question should be included in ending inventory, and if so, at what amount. (a) On February 26, Skysong shipped goods costing $1,440 to a customer and charged the customer $1,800. The goods were shipped with terms FOB shipping point and the receiving report indicates that the customer received the goods on March 2. Included or Not Included $ (b) On February 26, Louis Inc. shipped goods to Skysong under terms FOB shipping point. The invoice price was $450 plus $40 for freight. The receiving report indicates that the goods were received by Skysong on March 2.…

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