You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2024, you discover thefollowing errors related to the 2022 and 2023 financial statements:a. Inventory at 12/31/2022 was understated by $6,400.b. Inventory at 12/31/2023 was overstated by $9,800.c. On 12/31/2023, inventory was purchased for $3,400. The company did not record the purchase until the inventory was paid forearly in 2024. At that time, the purchase was recorded by a debit to purchases and a credit to cash.The company uses a periodic inventory system.Required:1. Assuming that the errors were discovered after the 2023 financial statements were issued, analyze the effect of the errors on2023 and 2022 cost of goods sold, net income, and retained earnings. (Ignore income taxes.)2. Prepare a journal entry to correct the errors.

Step 1: Analysis of the effect of the transactions- Particulars…

Answered: You have been hired as the new…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Whispering Winds Supply Company reports net income of $141,600 in 2023. The ending inventory did not include goods valued at $10,620 that Whispering Winds Supply had consigned to Staples. (For question answer please scroll far right) (1) What impact will this error have on the income statement for 2023? If ending inventory is ✓by $ (2) (3) What is the correct net income for 2023? The correct net income is $ 2 On the balance sheet, both inventory and retained earnings will be cost of goods sold will be What impact will this error have on the balance sheet at December 31, 2023? by $ and net
Kari Downs, an auditor with Wheeler CPAs, is performing a review of Sheridan Company's inventory account. Sheridan did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $731,000. However, the following information was not considered when determining that amount. (a1) Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Enter 0 if there is no effect.) 1. Ending inventory-as reported Included in the company's count were goods with a cost of $250,000 that the company is holding on consignment. The goods belong to Kroeger Corporation. 2. The physical count did not include goods purchased by Sheridan with a cost of $31,000 that were shipped FOB destination on December 28 and did not arrive at Sheridan warehouse until January 3. 3. Included in the…
On April 10, 2023, a fire damaged the office and warehouse of Sill Company. Most of the accounting records were destroyed, but the following account balances were determined as of March 31, 2023: Sales Revenue (January 1-March 31, 2023), $180,000; Purchases (January 1- March 31, 2023), $94,000. The company's fiscal year ends on December 31. It uses a periodic inventory system. From an analysis of the April bank statement, you discover cancelled checks of $4,200 for cash purchases during the period April 1-10. Deposits during the same period totaled $18,500. Of that amount, 60% were collections on accounts receivable related to sales made in prior periods, and the balance was cash sales. Correspondence with the company's principal suppliers revealed $12,400 of purchases on account from April 1 to April 10. Of that amount, $1,600 was for merchandise in transit on April 10 that was shipped FOB destination. Correspondence with the company's principal customers produced acknowledgments of…
I could use some help with homework can you explain how to do this? A mistake was made when counting the ending inventory at December 31, 2018: it was recorded incorrectly as $50,000 (not the correct $60,000). Ending inventory for 2019 was recorded correctly. The effect of this error on the firm's income would be: Group of answer choices -2018 income would be overstated by $10,000. -2018 and 2019 income would be understated by $10,000 for each year. -2018 income would be correct but 2019 would be overstated. -2018 income would be understated by $10,000 and 2019 income would be overstated by $10,000, the errors cancel each other out after 2 years. -None of the above.
Kari Downs, an auditor with Wheeler CPAS, is performing a review of Sheridan Company's inventory account. Sheridan did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year- end was $731,000. However, the following information was not considered when determining that amount. (a1) Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Enter O if there is no effect.) 1. 2. 3. 4. 5. 6. Ending inventory-as reported Included in the company's count were goods with a cost of $241,000 that the company is holding on consignment. The goods belong to Kroeger Corporation. The physical count did not include goods purchased by Sheridan with a cost of $38,000 that were shipped FOB destination on December 28 and did not arrive at Sheridan warehouse until January 3.…
The following information is presented for Marigold Corporation. The net income figures were computed without knowledge of the errors in ending inventory. Assume that there was no error in the 2016 ending inventory. Year Net Incomeper Books Error in EndingInventory 2017 $ 180,000 Overstated $ 23,000 2018 93,000 Overstated 35,000 2019 108,000 No error - 2020 218,000 Understated 6,200 2021 97,000 Understated 19,500 Prepare a worksheet to show the adjusted net income figure for each year from 2017 to 2021 after taking into account the inventory
#26 While examining the December 31, 2018 financial statements of Sydney company, the following errors are discovered: *Inventory on January 1 had been overstated by P30,000. *Inventory on December 31 was understated by P60,000. During 2018, Donna received a P120,000 cash advance from customer for merchandise to be manufactured and shipped during 2019. The amount was credited to sales revenue. *The net income reported on the 2018 income statement before reflecting any adjustment is P3,000,000. What is the corrected net income for the year ended December 31, 2018? ANSWER: 2,970,000 Pls provide solution and explanation for the answer above
While examining the December 31, 2010 financial statements of Dawn Company, the following errors are discovered:  Inventory at January 1 had been overstated by P50,000.;  Inventory at December 31 was understated by P100,000.;  During 2010, Dawn received a P200,000 cash advance from customer for merchandise to be manufactured and shipped during 2011. The collection was credited to sales revenue.;  The net income reported on the 2010 income statement before reflecting any adjustments for the above items is P5,000,000. What is the corrected net income for the year ended December 31, 2010? Choices; 4,950,000 5,150,000 5,100,000 4,850,000
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS