Waymire Company prepared the partial statements of earnings presented below for 2022 and 2021. 2022 2021 Sales revenue $538,200 $483,700 Cost of goods sold: Beginning inventory $39,300 $32,100 Purchases 343,200 292,700 Cost of goods available for sale 382,500 324,800 Ending inventory (46,800) 335,700 (39,300) 285,500 Gross margin 202,500 198,200 Operating expenses (167,200) (151,600) Income before taxes $ 35,300 $ 46,600 During 2023, Waymire's accountant discovered that ending inventory for 2022 had been overstated by $8,200. Required: 1. Prepare corrected 1. Prepare corrected statements of earnings for 2022 and 2021. for 2022 and 2021. Use the minus sign for negative values. 2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item. Indicate whether each error is an overstatement (+) or an understatement (-). If no entry is required, leave the amount box blank.
Waymire Company prepared the partial statements of earnings presented below for 2022 and 2021. 2022 2021 Sales revenue $538,200 $483,700 Cost of goods sold: Beginning inventory $39,300 $32,100 Purchases 343,200 292,700 Cost of goods available for sale 382,500 324,800 Ending inventory (46,800) 335,700 (39,300) 285,500 Gross margin 202,500 198,200 Operating expenses (167,200) (151,600) Income before taxes $ 35,300 $ 46,600 During 2023, Waymire's accountant discovered that ending inventory for 2022 had been overstated by $8,200. Required: 1. Prepare corrected 1. Prepare corrected statements of earnings for 2022 and 2021. for 2022 and 2021. Use the minus sign for negative values. 2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item. Indicate whether each error is an overstatement (+) or an understatement (-). If no entry is required, leave the amount box blank.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Effects of an Error in Ending Inventory
Waymire Company prepared the partial statements of earnings presented below for 2022 and 2021.
| 2022 | 2021 | ||||||||
| Sales revenue | $538,200 | $483,700 | |||||||
| Cost of goods sold: | |||||||||
| Beginning inventory | $39,300 | $32,100 | |||||||
| Purchases | 343,200 | 292,700 | |||||||
| Cost of goods available for sale | 382,500 | 324,800 | |||||||
| Ending inventory | (46,800) | 335,700 | (39,300) | 285,500 | |||||
| Gross margin | 202,500 | 198,200 | |||||||
| Operating expenses | (167,200) | (151,600) | |||||||
| Income before taxes | $ 35,300 | $ 46,600 |
During 2023, Waymire's accountant discovered that ending inventory for 2022 had been overstated by $8,200.
Required:
1. Prepare corrected 1. Prepare corrected statements of earnings for 2022 and 2021. for 2022 and 2021. Use the minus sign for negative values.
2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item. Indicate whether each error is an overstatement (+) or an understatement (-). If no entry is required, leave the amount box blank.
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