Horngren's Accounting (11th Edition)
11th Edition
ISBN: 9780133856781
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem E6.24E
Correcting an inventory error-two years
Natural Bile Grocery reported the following comparative income statements for the years ended June 30, 2017 and 2016:
During 2017, Natural Bite discovered that ending 2016 merchandise inventory was overstated by 55,000.
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.
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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
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:…
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.
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
Chapter 6 Solutions
Horngren's Accounting (11th Edition)
Ch. 6 - Which principle or concept states that business...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 - Which of the following is most closely linked to...Ch. 6 - At December 31, 2018, Stevenson Company overstated...Ch. 6 - Suppose Maestro’s had cost of goods sold during...Ch. 6 - Suppose used the LIFO inventory costing method and...Ch. 6 - Prob. 1RQ
Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Discuss some measures that should be taken to...Ch. 6 - Under a perpetual inventory system, what are the...Ch. 6 - When using a perpetual inventory system and the...Ch. 6 - During periods of rising costs, which inventory...Ch. 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 - How is inventory turnover calculated, and what it...Ch. 6 - How is days’ sales inventory calculated, and what...Ch. 6 - When using the periodic inventory system, which...Ch. 6 - When using periodic inventory system and...Ch. 6 - Determining inventory accounting principles...Ch. 6 - Determining inventory costing methods Learning...Ch. 6 - Prob. S6.3SECh. 6 - Prob. S6.4SECh. 6 - Prob. S6.5SECh. 6 - Prob. S6.6SECh. 6 - Prob. S6.7SECh. 6 - Prob. S6.8SECh. 6 - Prob. S6.9SECh. 6 - Prob. S6.10SECh. 6 - Prob. S6A.11SECh. 6 - Prob. S6A.12SECh. 6 - Prob. S6A.13SECh. 6 - Using accounting vocabulary Learning Objective 1,...Ch. 6 - Prob. E6.15ECh. 6 - Prob. E6.16ECh. 6 - Prob. E6.17ECh. 6 - Prob. E6.18ECh. 6 - Prob. E6.19ECh. 6 - Prob. E6.20ECh. 6 - Prob. E6.21ECh. 6 - Prob. E6.22ECh. 6 - Prob. E6.23ECh. 6 - Correcting an inventory error-two years Natural...Ch. 6 - Prob. E6.25ECh. 6 - Prob. E6A.26ECh. 6 - Prob. E6A.27ECh. 6 - Prob. P6.28APGACh. 6 - Prob. P6.29APGACh. 6 - Prob. P6.30APGACh. 6 - Objectives 5, 6 overstated $7,000 P6-31A...Ch. 6 -
Jepson Electronic Center began cost $70...Ch. 6 - Prob. P6.33BPGBCh. 6 - Prob. P6.34BPGBCh. 6 - Accounting principles for inventory and applying...Ch. 6 - Prob. P6.36BPGBCh. 6 - Prob. P6A.37BPGBCh. 6 - Prob. P6.38CPCh. 6 - Prob. P6.39PSCh. 6 - Prob. 6.1DCCh. 6 - > Fraud Case 6-1 Ever since he was a kid, Carl...Ch. 6 - Prob. 6.1FSC
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