Financial Accounting (12th Edition) (What's New in Accounting)
12th Edition
ISBN: 9780134725987
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
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Chapter 6, Problem 6.42BE
To determine
To Prepare: The income statement of SGN Corporation for the year ended September 30, 2018 and September 30, 2017.
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Waterlily Carpets' books show the following data.
(Click the icon to view the income statements.)
In early 2026, auditors found that the ending merchandise inventory for 2023 was understated by $7,000 and that the ending merchandise inventory for 2025 was overstated by $8,000. The ending merchandise inventory at December 31, 2024, was correct
Read the requirements.
Requirement 1. Prepare corrected income statements for the three years.
Waterlily Carpets
Income Statement
For the Years Ended December 31, 2025, 2024, and 2023
2024
Net Sales Revenue
Cost of Goods Sold
Beginning Merchandise Inventory
Plus: Net Cost of Inventory Purchased
Cost of Goods Available for Sale
Less Ending Merchandise Inventory
Cost of Goods Sold
Gross Profit
Operating Expenses
Net Income
2025
Ending Merchandise
Inventory Overstated
by $8,000
Correct
2023
Ending Merchandise
Inventory Understated
by $7,000
Wor
Data table
Net Sales Revenue
Cost of Goods Sold:
Beginning Merchandise Inventory
Plus: Net Cost of…
Malcolm Lee Industries reported the following amounts in its December 31st financial statements:
2023
$270,500
55,400
Cost of Goods sold
Ending Inventory
Errors were made in each year as follows: in 2023, ending inventory was overstated by $10,500 while in 2024, ending inventory
was understated by $6,800. Explain the impact of these errors for 2024 profit and owners' equity.
Profits will be
Owners' equity will be
2024
$287,700
55,400
by $
by $
Malcolm Lee Industries reported the following amounts in its December 31st financial statements:
2020
2021
Cost of Goods sold
$270,100
$288,600
Ending Inventory
55,600
55,600
Errors were made in each year as follows: in 2020, ending inventory was overstated by $10,600 while in 2021, ending inventory was understated by $6,600. Explain the impact of these errors for 2021 profit and owners’ equity.
Profits will be by $ .
Owners’ equity will be by $ .
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Chapter 6 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
Ch. 6 - Ravenna Candles recently purchased candleholders...Ch. 6 - Which inventory system maintains a running record...Ch. 6 - How is cost of goods sold classified in the...Ch. 6 - Snyders total cost of goods available for sale...Ch. 6 - Snyders cost of goods sold using the average-cost...Ch. 6 - Snyders ending inventory using the FIFO method...Ch. 6 - Snyders cost of goods sold using the LIFO method...Ch. 6 - Which U.S. GAAP principle or rule would apply if...Ch. 6 - Corrigan Corporation had beginning inventory of...Ch. 6 - Corrigans gross profit for the period is a.79,000....
Ch. 6 - What is Corrigans gross profit percentage (rounded...Ch. 6 - Prob. 12QCCh. 6 - A companys beginning inventory is 150,000, its net...Ch. 6 - An understatement of ending inventory by 2 million...Ch. 6 - Prob. 6.1ECCh. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - LO 1 (Learning Objective 1: Show how to account...Ch. 6 - (Learning Objective 2: Apply the average-cost,...Ch. 6 - (Learning Objective 2: Compare income tax effects...Ch. 6 - LO 2 (Learning Objective 2: Apply the average-cost...Ch. 6 - (Learning Objective 2: Apply the FIFO method)...Ch. 6 - (Learning Objective 2: Apply the LIFO method)...Ch. 6 - (Learning Objective 2: Compare income, tax, and...Ch. 6 - LO 3 (Learning Objective 3: Apply the...Ch. 6 - (Learning Objective 4: Compute ratio data to...Ch. 6 - (Learning Objective 5: Estimate ending inventory...Ch. 6 - (Learning Objective 6: Analyze the effect of an...Ch. 6 - Prob. 6.14SCh. 6 - LO 1,2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 1,2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 2 (Learning Objective 2: Compare ending...Ch. 6 - (Learning Objective 2: Compare the tax advantage...Ch. 6 - Prob. 6.19AECh. 6 - LO 2 (Learning Objective 2: Compare ending...Ch. 6 - LO 2 (Learning Objective 2: Compare gross...Ch. 6 - Prob. 6.22AECh. 6 - LO 5 (Learning Objective 5: Compute cost of goods...Ch. 6 - Prob. 6.24AECh. 6 - LO 4 (Learning Objective 4: Compute and evaluate...Ch. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - LO 6 (Learning Objective 6: Analyze the effect of...Ch. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - LO1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - Prob. 6.32BECh. 6 - LO 2 (Learning Objective 2: Apply the average,...Ch. 6 - Prob. 6.34BECh. 6 - Prob. 6.35BECh. 6 - Prob. 6.36BECh. 6 - Prob. 6.37BECh. 6 - Prob. 6.38BECh. 6 - Prob. 6.39BECh. 6 - Prob. 6.40BECh. 6 - Prob. 6.41BECh. 6 - Prob. 6.42BECh. 6 - Prob. 6.43QCh. 6 - Prob. 6.44QCh. 6 - Prob. 6.45QCh. 6 - The word market as used in the lower of cost or...Ch. 6 - Prob. 6.47QCh. 6 - Prob. 6.48QCh. 6 - Prob. 6.49QCh. 6 - In a period of rising prices, a.cost of goods sold...Ch. 6 - Prob. 6.51QCh. 6 - The following data come from the inventory records...Ch. 6 - Prob. 6.53QCh. 6 - Prob. 6.54QCh. 6 - Prob. 6.55QCh. 6 - Prob. 6.56QCh. 6 - Prob. 6.57QCh. 6 - Prob. 6.58QCh. 6 - Prob. 6.59QCh. 6 - LO 1, 2 (Learning Objectives 1, 2: Show how to...Ch. 6 - Prob. 6.61APCh. 6 - LO 2 (Learning Objective 2: Compare inventory by...Ch. 6 - LO 2 (Learning Objective 2: Compare various...Ch. 6 - Prob. 6.64APCh. 6 - (Learning Objective 4: Compute and evaluate gross...Ch. 6 - LO 4, 5 (Learning Objectives 4, 5: Compute gross...Ch. 6 - Prob. 6.67APCh. 6 - Prob. 6.68APCh. 6 - Prob. 6.69BPCh. 6 - LO 2 (Learning Objective 2: Apply various...Ch. 6 - Prob. 6.71BPCh. 6 - LO 2 (Learning Objective 2: Compare various...Ch. 6 - LO 3 (Learning Objective 3: Explain GAAP and apply...Ch. 6 - Prob. 6.74BPCh. 6 - Prob. 6.75BPCh. 6 - LO 5 (Learning Objective 5: Use the COGS model to...Ch. 6 - Prob. 6.77BPCh. 6 - Prob. 6.78CEPCh. 6 - Prob. 6.79CEPCh. 6 - Prob. 6.80CEPCh. 6 - Prob. 6.81CEPCh. 6 - Prob. 6.82SCCh. 6 - Prob. 6.83DCCh. 6 - Prob. 6.85EICCh. 6 - Prob. 1FFCh. 6 - Prob. 1FA
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- kindly asking you to answer immediately please thank you so much!arrow_forwardThe accounting records of DUB Co. showed these data for 2020: Inventory, January 1 P500,000 Purchases P2,500,000 Sales P3,200,000. A physical inventory taken on December 31, 2020 resulted in an ending inventory of P500,000. Gross profit on sales has remained constant at 25% in recent years. The company suspects some inventory may have been taken by a new employee. What is the estimated cost of missing inventory?arrow_forwardIgnoring income taxes, what is the total effect of the errors on 2022 net income? ( Leave the numerical figure positive, put a dash then identify if OVERSTATED or UNDERSTATED, example: 25000-OVERSTATED)arrow_forward
- The following data are from the income statements of Haskin Company. Year 2017 2016 Sales revenue $6,420,000 $6,420,000 Beginning inventory 940,000 860,000 Purchases 4,340,000 4,661,000 Ending inventory 1,020,000 940,000 Answer the following questions: Compute for each year (1) the inventory turnover and (2) the days in inventory? What conclusions concerning the management of the inventory can be drawn from these data?arrow_forwardOver a four-year period, Jackie Corporation reported the following series of gross profits. 2018 2019 2020 2021Net sales $60,000 $66,000 $74,000 $90,000Cost of goods sold 32,000 46,000 28,000 48,000Gross profit $28,000 $20,000 $46,000 $42,000In 2021, the company performed a comprehensive review of its inventory accounting procedures. Based on this review, company records reveal that ending inventory was understated by $11,000 in 2019. Inventory in all other years is correct.Required: 1. Calculate the gross profit ratio for each of the four years based on amounts originally reported. 2. Calculate the gross profit ratio for each of the four years based on corrected amounts. Describe the trend in the gross profit ratios based on the original amounts versus the corrected amounts. 3. Total gross profit over the four-year period…arrow_forwardThe Northern Company installed a new inventory management system at the beginning of 2018. Shown below are data from the company's accounting records as reported out by the new system: 2018 2019 $8,000,000 $11,000,000 Sales Revenue Cost of Goods Sold 4.000.000 4,800,000 Beginning Inventory Ending Inventory 510,000 550,000 540,000 600,000 Calculate the company's (a) inventory turnover and (b) days' sales in inventory for 2018 and 2019. Round your answer to two decimal points. 2018 2019 Inventory turnoverarrow_forward
- Koopman Company began operations on January 1, 2015, and uses the FIFO inventory method for financial reporting and the average cost inventory method for income taxes. At the beginning of 2017, Koopman decided to switch to the average cost inventory method for financial reporting. It had previously reported the following financial statement information for 2016: KOOPMAN COMPANY Income Statement For the Year Ended December 31, 2016 1 Revenues $100,000.00 2 Cost of goods sold (60,000.00) 3 Gross profit $40,000.00 4 Operating expenses (25,000.00) 5 Income before income taxes $15,000.00 6 Income tax expense (4,500.00) 7 Net income $10,500.00 8 Earnings per share $1.05 KOOPMAN COMPANY Retained Earnings Statements For Year Ended December 31, 2016 1 Beginning retained earnings $15,000.00 2 Add: Net income 10,500.00 3 $25,500.00 4 Less:…arrow_forwardPlease answer question. NOTE this is one question with multiple parts answer each carefullyarrow_forward8. Compute for the net sales that would be reported in LIVA company’s Income Statement.arrow_forward
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