6th Edition

ISBN: 9781260664386

Author: PHILLIPS, LIBB

Publisher: MCG

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Chapter 7, Problem 5PB

(Supplement 7B) Analyzing and Interpreting the Effects of Inventory Errors

Spears & Cantrell announced inventory had been overstated by $30 at the end of its second quarter. The error wasn’t discovered and corrected in the company’s periodic inventory system until after the end of the third quarter. The following table shows the amounts that were originally reported by the company.

Chapter 7, Problem 5PB, (Supplement 7B) Analyzing and Interpreting the Effects of Inventory Errors Spears Cantrell

Required:

1. Restate the income statements to reflect the correct amounts, after fixing the inventory error.
2. Compute the gross profit percentage for each quarter (a) before the correction and (b) after the correction, rounding to the nearest percentage. Do the results lend confidence to your corrected amounts? Explain.

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Chapter 7, Problem 4PB

Chapter 7, Problem 1COP

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Chapter 7 Solutions

FUNDAMENTALS OF FINANCIAL ACCOUNTING

Ch. 7 - What are three goals of inventory management?Ch. 7 - Describe the specific types of inventory reported...Ch. 7 - The chapter discussed four inventory costing...Ch. 7 - Which inventory cost flow method is most similar...Ch. 7 - Where possible, the inventory costing method...Ch. 7 - Contrast the effects of LIFO versus FIFO on ending...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Several managers in your company are experiencing...Ch. 7 - Explain briefly the application of the LCM rule to...Ch. 7 - Prob. 10Q

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Solution Summary: The author explains the requirement of Restate: The partial income statement to reflect the correct amount, after fixing the inventory error.

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