Inventory error: Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet . To indicate: the effect of misstatement on MRS Company in their balance sheet.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

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Effect of Errors in Physical Inventory Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2012, Missouri River Supply incorrectly counted its inventory as $437,030 instead of the correct amount of $450,140. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 2012, balance sheet of Missouri River Supply. Balance Sheet Items Understated/Overstated Amount Merchandise Inventory Current Assets Total Assets Owner's Equity b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 20Y2. Income Statement Items Cost of Merchandise Sold Gross Profit Net Income Overstated/Understated Amount c. If uncorrected, what would be the effect of the error on the 20Y3 income statement? Income Statement Items Cost of Merchandise Sold Gross Profit Net Income Overstated/Understated Amount d. If uncorrected, what…

Effect of Errors in Physical Inventory Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $780,650 instead of the correct amount of $804,070. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 20Y2, balance sheet of Missouri River Supply. Balance Sheet Items Understated/Overstated Amount Merchandise Inventory Understated $ Current Assets Overstated Total Assets Understated Owner's Equity b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 20Y2. Income Statement Items Overstated/Understated Amount Cost of Merchandise Sold Overstated $ Gross Profit Net Income c. If uncorrected, what would be the effect of the error on the 20Y3 income statement? Income Statement Items…

Effect of Errors in Physical Inventory Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $569,360 instead of the correct amount of $586,440. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 20Y2, balance sheet of Missouri River Supply. Balance Sheet Items Understated/Overstated Amount Merchandise Inventory $ Current Assets Total Assets Owner's Equity b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 20Y2. Income Statement Items Overstated/Understated Amount Cost of Merchandise Sold $ Gross Profit Net Income c. If uncorrected, what would be the effect of the error on the 20Y3 income statement? Income Statement Items Overstated/Understated Amount Cost of…

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

Expert Solution & Answer

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Answer 5

Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

Answer 6

Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

Answer 7

Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

Answer 8

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

Answer 9

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

Answer 10

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

Answer 11

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

Answer 12

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

Answer 13

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 7 - Prob. 1DQ Ch. 7 - Why is it important to take a physical inventory...Ch. 7 - Do the terms FIFO, LIFO, and weighted average...Ch. 7 - If merchandise inventory is being valued at cost...Ch. 7 - Which of the three methods of inventory...Ch. 7 - If inventory is being valued at cost and the price...Ch. 7 - Using the following data, how should the...Ch. 7 - The inventory at the end of the year was...Ch. 7 - Hutch Co. sold merchandise to Bibbins Company on...Ch. 7 - A manufacturer shipped merchandise to a retailer...

Solution Summary: The author explains that inventory errors affect both the income statement and the balance sheet.

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To indicate: the effect of misstatement on MRS Company in their income statement.

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.

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Chapter 7 Solutions