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
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 6, Problem 6.77BP
1.
To determine
To Show: Corrected income statement for each of the three years.
2.
To determine
The manner in which these assumed corrections add to or take away from Company BH’s total net income over the three-year period and the manner in which the corrections affect the trend of net income.
3.
To determine
To explain: The Company BH’s shareholders still are happy with the Company’s trend of net income.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Kari
Downs, an auditor with Wheeler CPAS, is performing a review of Waterway Company's inventory account. Waterway did not have
a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-
end was $747,000. However, the following information was not considered when determining that amount.
(a1) Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative
sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Enter O if there is no effect.)
1.
2.
3.
4.
5.
6.
Ending inventory-as reported
Included in the company's count were goods with a cost of $257,000 that the company is
holding on consignment. The goods belong to Kroeger Corporation.
The physical count did not include goods purchased by Waterway with a cost of
$35,000 that were shipped FOB destination on December 28 and did not arrive at
Waterway warehouse until January 3.…
Title
You conclude that Janice is incorrect. Write a brief, tactful memo to Janice, clarifying the situation.
Description
You are the controller of Small Toys Inc. Janice LeMay, the president, recently mentioned to you that she found an error in the 2009 financial statements which she believes has corrected itself. She determined, in discussions with the Purchasing Department, that 2009 ending inventory was overstated by $1 million. Janice says that the 2010 ending inventory is correct. Thus she assumes that 2010 income is correct. Janice says to you, “What happened has happened—there’s no point in worrying about it anymore.”
Instructions
You conclude that Janice is incorrect. Write a brief, tactful memo to Janice, clarifying the situation.
Kari Downs, an auditor with Wheeler CPAS, is performing a review of Swifty Company's inventory account. Swifty did not have a good
year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was
$747,000. However, the following information was not considered when determining that amount.
(a1) Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative
sign preceding the number, e.g. -15,000, or parenthesis e.g. (15,000). Enter O if there is no effect.)
1.
2.
3.
4.
5.
6.
Ending inventory-as reported
Included in the company's count were goods with a cost of $244,000 that the company is
holding on consignment. The goods belong to Kroeger Corporation.
The physical count did not include goods purchased by Swifty with a cost of $40,000 that
were shipped FOB destination on December 28 and did not arrive at Swifty warehouse
until January 3.
Included in the…
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Malcolm Lee Industries reported the following amounts in its December 31st financial statements: 2023 $270,500 55,400 Cost of Goods sold Ending Inventory Errors were made in each year as follows: in 2023, ending inventory was overstated by $10,500 while in 2024, ending inventory was understated by $6,800. Explain the impact of these errors for 2024 profit and owners' equity. Profits will be Owners' equity will be 2024 $287,700 55,400 by $ by $arrow_forwardHOW DO I WORKOUT THIS PROBLEM? Kari Downs, an auditor with Wheeler CPAs, is performing a review of Waterway Company’s inventory account. Waterway did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $747,000. However, the following information was not considered when determining that amount. Prepare a schedule to determine the correct inventory amount.arrow_forwardFarley Bains, an auditor with Nolls CPAs, is performing a review of Teal Mountain Inc.’s Inventory account. Teal Mountain Inc. did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $808,200. However, the following information was not considered when determining that amount. Ending inventory-as reported $enter a dollar amount 1. Included in the company’s count were goods with a cost of $224,170 that the company is holding on consignment. The goods belong to Nader Corporation. enter a dollar amount 2. The physical count did not include goods purchased by Teal Mountain Inc.with a cost of $38,530 that were shipped FOB shipping point on December 28 and did not arrive at Teal Mountain Inc.’s warehouse until January 3. enter a dollar amount 3. Included in the Inventory account was $18,300 of office supplies that were stored in the…arrow_forward
- 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?arrow_forwardProblem 1. How much is the adjusted inventory? * Makati Company is preparing its 2022 financial statements. Prior to any adjustments, inventory is valued at P1,605,000. During your audit, you found the following information relating to certain inventory transactions from your cutoff test. a. b. C. e. f. Goods valued at P110,000 are on consignment with a customer. These goods were not included in the ending inventory figure. d. A P35,000 shipment of goods to a customer on December 31, terms FOB destination was not included in the year-end inventory. The goods cost P26,000 and were delivered to the customer on January 8, 2023. The sale was properly recorded in 2023. g. Goods costing P87,000 were received from a vendor on January 5, 2023. The related invoice was received and recorded on January 12, 2023. The goods were shipped on December 31, 2022, terms FOB shipping point. Goods costing P85,000, sold for P102,000, were shipped on December 31, 2022, and were delivered to the customer on…arrow_forwardFarley Bains, an auditor with Nolls CPAs, is performing a review of Wildhorse Company's Inventory account. Wildhorse did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year- end was $793,920. However, the following information was not considered when determining that amount. (a1) Prepare a schedule to determine the correct inventory amount. (Show amounts that reduce inventory with a negative sign e.g. -45 or parentheses e.g. (45).) Ending inventory-as reported 1. Included in the company's count were goods with a cost of $225,250 that the company is holding on consignment. The goods belong to Nader Corporation. 2. 3. 4. 5. The physical count did not include goods purchased by Wildhorse with a cost of $40,080 that were shipped FOB shipping point on December 28 and did not arrive at Wildhorse's warehouse until January 3. Included in the Inventory account was $18,120 of office supplies that were stored…arrow_forward
- CJ 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?arrow_forwardScenario 1:Rocky Inc hired a new intern from CSU to help with year-end inventory. The intern computed the inventory counts at the end of 2020 and 2021. However, the intern's manager, a UNC grad, noticed that the ending inventory did not include inventory on consignment to a retail customer of $3,000 at the end of year 2020 and $6,000 at the end of year 2021. What was the effect of the error (if any] on 2021's statements (amount and whether it was under- ( too low) or over-stated (too high)? If there is no effect, put OKarrow_forwardFarley Bains, an auditor with Nolls CPAs, is performing ar ga review of Ryder Company's Inventory account. Ryder did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount. Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with o negative sign preceding the number, e.g.-15,000, or parenthesis eg. (15,000). Enter 0 if there is no effect.) 1. Your answer is partially correct. 2 3 Ending inventory-as reported Included in the company's count were goods with a cost of $228,000 that the company is holding on consignment. The goods belong to Nader Corporation. The physical count did not include goods purchased by Ryder with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Ryder's warehouse until January…arrow_forward
- 6. You wil PROBLEM: Net income for Victory Company for the years 2021 and 2022 is shown below. An audit of the accounts, however, disclosed the following errors: 2021 2022 Net income after income tax 246,500 312.500 Understatement of year-end inventory 25.000 Purchase of computer at year cnd charged to expense. The estimated useful life is 10 years. 40,000 Credit purchases of merchandise not recorded but included in the physical count at year end 50,000 Rent received in advance and credited to incomne 18.000 Unrecorded unpaid taxes at year-end, 20.000 QUESTIONS: 1. What is the correct net income for the year 2021? 2. What is the correct net income for the year 2022?arrow_forwardWaterlily 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…arrow_forward15. Farrell's Window Supply has seen an increase in sales, but the company is concerned with its inventory management. Has the increase in sales caused the company's ability to manage inventory effectively to decrease? Support your answer by finding the changes in inventory turnover and number of days' sales in inventory. Round ratios to one decimal place. Inventory: Beginning of year End of year Purchases of inventory 20Y6 2015 $350,900 $352,300 325,400 350,900 330,600 325,200 shulpsins, of woted notandin YOS has 2Y02 dinaarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License