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…
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
choices:
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
choices:
P144,000
P432,000
P108,000
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
choices:
P40,000 understated; P90,000 overstated and P50,000 understated
P40,000 understated; P50,000 overstated and not affected
P40,000 understated; P10,000 overstated and not affected
P40,000 overstated; P50,000 understated and P10,000 overstated
3. Hardy Company is a wholesale electronics distributor. On December 31, 2020, it prepared the following partial income statement: Inventory, January 1 P 200,000; Net Purchases 300,000; Net Sales 600,000.Given this information, if Hardy Company's gross margin is 30 percent of net sales, what is the correct ending inventory balance?
choices:…
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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