Ch+9+Pr+12 - 3,000 Requirement 3 The financial statements...

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Problem 9-12 Requirement 1 Analysis: U = Understated O = Overstated 2004 2005 Beginning inventory Beginning inventory U-6,000 Plus: Net purchases Plus: N et purchases U-3,000 Less: E nding inventory U-6,000Less: E nding inventory O-9,000 Cost of goods sold O-6,000 Cost of goods sold U-18,000 Revenues Revenues Less: C ost of goods sold O-6,000 Less: C ost of goods sold U-18,000 Less: O ther expenses Less: O ther expenses Net income U-6,000 Net income O- 18,000 Retained earnings U-6,000 Retained earnings O-12,000 Requirement 2 Retained earnings. .......................................................... 12,000 Inventory. .................................................................... 9,000 Purchases. ...................................................................
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Unformatted text preview: 3,000 Requirement 3 The financial statements that were incorrect as a result of both errors (effect of one error in 2004 and effect of three errors in 2005) would be retrospectively restated to report the correct inventory amounts, cost of goods sold, income, and retained earnings when those statements are reported again for comparative purposes in the 2006 annual report. A prior period adjustment to retained earnings would be reported, and a disclosure note should describe the nature of the error and the impact of its correction on each years net income, income before extraordinary items, and earnings per share....
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Ch+9+Pr+12 - 3,000 Requirement 3 The financial statements...

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