HMsolotion-ch9 - Chapter 9 Homework Solution and etc. E...

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Chapter 9 Homework Solution and etc. E 9-21 Inventory Errors U: understated; O: overstated; NE: no effect Note that it’s easier to do the analysis using the formula to calculate COGS for the periodic inventory system; i.e. COGS = BI + Net purchases – EI and NI = Sales – COGS – other expense items COGS NI R/E 1. Overstatement of ending inventory U O O EI is too much, COGS will be too little, NI will be too much, and R/E will be too much COGS NI R/E 2. Overstatement of purchases O U U Purchases are too much, COGS will be too much, NI will be too little, and R/E will be too little COGS NI R/E 3. Understatement of beginning inventory U O O BI is too little, COGS will be too little, NI will be too much, and R/E will be too much COGS NI R/E 4. Freight-in charges are understated U O O Freight-in is too little, purchases will be too little, COGS will be too little, NI will be too much, and R/E will be too much COGS NI R/E 5. Understatement of ending inventory O U U EI is too little, COGS will be too much, NI will be too little, and R/E will be too little
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HMsolotion-ch9 - Chapter 9 Homework Solution and etc. E...

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