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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Chapter 6, Problem 6.24E
1.
To determine
Inventory error: It is the error to identify a mistake in physical count or in pricing qualities. It is also discovered in same accounting period.
To Prepare: The corrected income statements for the two years.
2.
To determine
To State: Whether each year’s net income before corrections is understated or overstated.
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2. Tretorn Company began operations in 2018. During the first two years of operations, Tretorn made undiscovered errors in taking its year-end inventories that understated 2018 ending inventory by P40,000 and overstated 2019 ending inventory by P50,000. The combined effect of these errors on reported income for the year 2018, 2019 and 2020 respectively is
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2. Tretorn Company began operations in 2018. During the first two years of operations, Tretorn made undiscovered errors in taking its year-end inventories that overstated 2018 ending inventory by P50,000 and understated 2019 ending inventory by P40,000. The combined effect of these errors on reported income for the year 2018, 2019 and 2020 respectively is
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P50,000 understated; P90,000 overstated and P40,000 understated
P50,000 overstated; P90,000 understated and P40,000 overstated
P50,000 overstated; P40,000 understated and not affected
P50,000 overstated; P90,000 understated and not affected
3. Golden Company maintains a markup of 60 percent based on cost. The company's selling and administrative expenses average 30 percent of sales. Annual sales were P1,440,000. Golden's operating profit for the year is
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During 2016, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: 2014 understated by $120,000 2015 overstated by 150,000 WMC uses the periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2016, before any adjustments. Explain your answer. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. What other step(s) would be taken in connection with the error?
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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