You are examining the financial statements of DON JOHN CORPORATION which ends on December 31. DON JOHN CORP. uses the physical inventory system of accounting for inventory. During your examination, you discovered the errors below. 1. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were included in the 2019 ending inventory. 2. The inventory at December 31, 2019 is understated as a result of errors in physical count. 3. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were excluded from the 2019 ending inventory. 4. The inventory at December 31, 2019 is overstated as a result of the inclusion of goods acquired on consignment. 5. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were excluded from the 2019 ending inventory. 6. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were included in the 2019 ending inventory. Enter the effect of the errors in the solution guide below. Use the following symbols: O-Overstated, U-Understated X-No effect
You are examining the financial statements of DON JOHN CORPORATION which ends on December 31. DON JOHN CORP. uses the physical inventory system of accounting for inventory. During your examination, you discovered the errors below. 1. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were included in the 2019 ending inventory. 2. The inventory at December 31, 2019 is understated as a result of errors in physical count. 3. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were excluded from the 2019 ending inventory. 4. The inventory at December 31, 2019 is overstated as a result of the inclusion of goods acquired on consignment. 5. Goods received in January 2020 were recorded as purchase on account in December 2019. The goods were excluded from the 2019 ending inventory. 6. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods were included in the 2019 ending inventory. Enter the effect of the errors in the solution guide below. Use the following symbols: O-Overstated, U-Understated X-No effect
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Topic Video
Question
Effect of the error # 1 for the year 2020
Answer the ff:
| O-Overstated | U-Understated | X-No effect | |
| Purchases | |||
| Cost of Sales | |||
| Net income | |||
| Inventory | |||
| Accounts Payable | |||
| RE before closing | |||
| RE after closing |
Transcribed Image Text:You are examining the financial statements of DON JOHN CORPORATION which ends on December
31. DON JOHN CORP. uses the physical inventory system of accounting for inventory. During your
examination, you discovered the errors below.
1. Goods received in January 2020 were recorded as purchase on account in December 2019. The
goods were included in the 2019 ending inventory.
2. The inventory at December 31, 2019 is understated as a result of errors in physical count.
3. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods
were excluded from the 2019 ending inventory.
4. The inventory at December 31, 2019 is overstated as a result of the inclusion of goods acquired
on consignment.
5. Goods received in January 2020 were recorded as purchase on account in December 2019. The
goods were excluded from the 2019 ending inventory.
6. Goods received in December 2019 were recorded as purchases when paid in 2020. The goods
were included in the 2019 ending inventory.
Enter the effect of the errors in the solution guide below. Use the following symbols:
O-Overstated,
U-Understated X-No effect
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