student P06 (1).xls

# student P06 (1).xls - Student Name Class Problem 06-06A...

• 5

This preview shows pages 1–2. Sign up to view the full content.

Student Name: Class: Problem 06-06A NAVAJO COMPANY Adjustments to Correct Inventory Errors (a) Cost of goods sold: 2012 2013 2014 Reported \$ 615,000 \$ 957,000 \$ 780,000 Adjustments: 12/31/2012 error (56,000) 56,000 12/31/2013 error 20,000 (20,000) Corrected \$ 559,000 \$ 1,033,000 \$ 760,000 Correct! Correct! Correct! (b) Net income: 2012 2013 2014 Reported \$ 230,000 \$ 285,000 \$ 241,000 Adjustments: 12/31/2012 error 56,000 (56,000) 12/31/2013 error (20,000) 20,000 Corrected \$ 286,000 \$ 209,000 \$ 261,000 Correct! Correct! Correct! (c) Total current assets: 2012 2013 2014 Reported \$ 1,255,000 \$ 1,365,000 \$ 1,200,000 Adjustments: 12/31/2012 error 56,000 12/31/2013 error (20,000) Corrected \$ 1,311,000 \$ 1,345,000 \$ 1,200,000 Correct! Correct! Correct! (d) Equity: 2012 2013 2014 Reported \$ 1,387,000 \$ 1,530,000 \$ 1,242,000 Adjustments: 12/31/2012 error 56,000 12/31/2013 error (20,000) Corrected \$ 1,443,000 \$ 1,510,000 \$ 1,242,000 Correct! Correct! Correct! 2. What is the error in total net income for the combined three-year period resulting from the inventory errors? Explain At the end of the combined three-year period, the result of the total net income will not be affected by the errors 3. Explain why the understatement of inventory by \$56,000 at the end of 2012 results in an understatement of equity by the same amount in that year.

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• Spring '12
• McGee

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern