In class Problem - results in an understatement of equity by the same amount in that year Problem 5-2A as given NAVAJO COMPANY For Year Ended

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Problem 05-02A NAVAJO COMPANY Adjustments for to Correct Inventory Errors Cost of goods sold: 2007 2008 2009 Reported amount Adjustments for: 12/31/2007 error 12/31/2008 error Corrected Net income: 2007 2008 2009 Reported amount Adjustments for: 12/31/2007 error 12/31/2008 error Corrected Total current assets: 2007 2008 2009 Reported amount Adjustments for: 12/31/2007 error 12/31/2008 error Corrected Equity: 2007 2008 2009 Reported amount Adjustments for: 12/31/2007 error 12/31/2008 error Corrected 2. What is the error in total net income for the combined three-year period resulting from the inventory errors? Explain 3. Explain why the understatement of inventory by $56,000 at the end of 2007
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Unformatted text preview: results in an understatement of equity by the same amount in that year. Problem 5-2A as given NAVAJO COMPANY For Year Ended December 31 Key Figures 2007 2008 2009 Cost of goods sold $615,000 $957,000 $780,000 Net income 230,000 285,000 241,000 Total current assets 1,255,000 1,365,000 1,200,000 Total equity 1,387,000 1,530,000 1,242,000 Inventory errors: Understated December 31, 2007 $56,000 Overstated December 31, 2008 20,000 Check figures: (1) Corrected net income: 2007 $286,000 Corrected net income: 2008 209,000 Corrected net income: 2009 261,000...
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This note was uploaded on 04/01/2008 for the course ACCT 2101 taught by Professor Bhan during the Fall '07 term at University of Georgia Athens.

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In class Problem - results in an understatement of equity by the same amount in that year Problem 5-2A as given NAVAJO COMPANY For Year Ended

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