Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
5th Edition
ISBN: 9780134078939
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem 6.31AP
Correcting inventory errors over a three-year period and computing inventory turnover and days’ sales in inventory
Lake Air Carpets’s books how the following data. In early 2018, auditors found that the ending merchandise inventory for 2015 was understated by $6,000 and that the ending merchandise inventory for 2017 was overstated by $7,000. The ending merchandise inventory at December 31, 2016, was correct.
Requirements
- 1. Prepare corrected income statements for the three years.
- 2. State whether each year’s net income—before your corrections—is understated or overstated, and indicate the amount of the understatement or overstatement.
- 3. Compute the inventory turnover and days’ sales in inventory using the corrected income statements for the three years. (Round all numbers to two decimals.)
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Topic: SINGLE-ENTRY BOOKKEEPING
SANAOL Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit rate based on net sales is consistent every year. To aid in your investigation, you obtained the following:
How much is the missing inventory during the year?
I What is the amount of gross profit for the eleven months
2 What is the amount of sales for the month of June?
a What is the cost of goods sold for the month of June ?
at an interim date, May 31, 2020, instead of at year end.
ended June 30, 2020, the CPA observed the physical inventory
The following information was obtained from the general
„Problem 13-14 (AICPA Adapted)
ended May 31, 2020?
year
In conducting an audit of Ultimate Company for the
a 1,680,000
b. 1,725,000
C. 1,735,000
d. 1,670,000
ledger.
Inventory, July 1, 2019
Physical inventory, May 31, 2020
Sales for 11 months ended May 31, 2020
Sales for year ended June 30, 2020
Purchases for 11 months ended May 31, 2020
before audit adjustments
Purchases for year ended June 30, 2020
before audit adjustments
875,000
950,000
8,400,000
9,600,000
в. 1,100,000
b. 1,200,000
c. 1,300,000
d. 1,400,000
er 14
6,750,000
8,000,000
1. Shipments received in May and included in the
physical inventory but recorded as June purchases
a. 960,000
b.…
For all exercises, assume the perpetual inventory system is used unless stated otherwise.
Correcting an inventory error—two years
Nature Foods Grocery.1 reported the following comparative income statements for the year ended June 30, 2019 and 2018:
During 2019, Nature Foods Grocery discovered that ending 2018 merchandise inventory was overstated by $5,500.
Requirements
Prepare corrected income statements for the two years.
State whether each year’s net income—before your corrections—is understated or overstated, and indicate the amount of the understatement or overstatement.
Chapter 6 Solutions
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Ch. 6 - Which principle or concept states that businesses...Ch. 6 - Which inventory costing method assigns to ending...Ch. 6 - Assume Nile.com began April with 14 units of...Ch. 6 - Suppose Nile.com used the weighted-average...Ch. 6 - Which inventory costing method results in the...Ch. 6 - Prob. 6QCCh. 6 - At December 31, 2016, Stevenson Company overstated...Ch. 6 - Suppose Maestros had cost of goods sold during the...Ch. 6 - Suppose Nile.com used the LIFO inventory costing...Ch. 6 - Prob. 1RQ
Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - What is the goal of conservatism?Ch. 6 - Prob. 5RQCh. 6 - Under a perpetual inventory system, what are the...Ch. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - What does the lower-of-cost-or-market (LCM) rule...Ch. 6 - What account is debited when recording the...Ch. 6 - What is the effect on cost of goods sold, gross...Ch. 6 - When does an inventory error cancel out, and why?Ch. 6 - Prob. 13RQCh. 6 - Prob. 14RQCh. 6 - Prob. 15ARQCh. 6 - Prob. 16ARQCh. 6 - Determining inventory accounting principles Ward...Ch. 6 - Determining inventory costing methods Ward Hard...Ch. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Comparing Cost of Goods Sold under FIFO, UFO, and...Ch. 6 - Applying the lower-of-cost-or-market rule Assume...Ch. 6 - Determining the effect of an inventory error...Ch. 6 - Computing the rate of inventory turnover and days...Ch. 6 - Use the following information to answer Short...Ch. 6 - Prob. 6.12SECh. 6 - Prob. 6.13SECh. 6 - Using accounting vocabulary Match the accounting...Ch. 6 - Comparing inventory methods Zippy, a regional...Ch. 6 - Prob. 6.16ECh. 6 - Use the following information to answer Exercises...Ch. 6 - Use the following information to answer Exercises...Ch. 6 - Comparing amounts for cost of goods sold, ending...Ch. 6 - Comparing cost of goods sold and gross...Ch. 6 - Prob. 6.21ECh. 6 - Prob. 6.22ECh. 6 - Prob. 6.23ECh. 6 - Prob. 6.24ECh. 6 - Prob. 6.25ECh. 6 - Prob. 6.26ECh. 6 - Prob. 6.27ECh. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Prob. 6.30APCh. 6 - Correcting inventory errors over a three-year...Ch. 6 - Accounting for inventory using the periodic...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Prob. 6.34BPCh. 6 - Prob. 6.35BPCh. 6 - Prob. 6.36BPCh. 6 - Prob. 6.37BPCh. 6 - Prob. 6.38CPCh. 6 - Accounting for inventory using the perpetual...Ch. 6 - Suppose you manage Campbell Appliance. The stores...Ch. 6 - Ever since he was a kid, Carl Montague wanted to...Ch. 6 - The notes are an important part of a companys...
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