Chapter_8_inventory_review_question_part_2--_inventory_errors

Chapter_8_inventory_review_question_part_2--_inventory_errors

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Page 1 of 3 Question Buy More Co. reported the following amounts in its financial statements: Financial Statement for Year Ended Dec. 31 2009 2010 2011 (a) Goods available for sale $ 1,250,000 $ 1,105,000 $ 975,000 (b) Cost of Goods Sold 358,000 435,000 382,000 (c) Net Income 65,000 87,000 74,000 (d) Total Current Assets 855,000 965,000 880,000 (e) Shareholders' Equity 970,000 1,150,000 1,012,000 During 2011, the following errors were discovered: 1. Inventory counting errors as follows: (a) Inventory on Dec. 31, 2008: overstated $30,000 (b) Inventory on Dec. 31, 2009: overstated $50,000 (c) Inventory on Dec. 31, 2010: understated $20,000 2. $32,000 of merchandise inventory purchased on December 23, 2011 was shipped FOB shipping point and received on January 6, 2009. It was not included in the inventory on December 31, 2011 since it was not physically in the warehouse during the inventory count. 3. A credit memorandum for $2,000 which represents a price adjustment for
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Unformatted text preview: damaged goods was received on December 29 th but was not recorded until January 3, 2009. Required: For each of the preceding financial statement items (a), (b), (c), and (d) prepare a schedule and show the adjustments that would have been necessary to correct the reported amounts. Page 2 of 3 QUESTION Financial Statement for Year Ended Dec. 31 (a) Goods available for sale 2009 2010 2011 Reported Adjustments: Adjustments: Adjustments: Adjustments: Adjustments: Corrected (b) Cost of Goods Sold 2009 2010 2011 Reported Adjustments: Adjustments: Adjustments: Adjustments: Adjustments: Corrected (c) Net Income 2009 2010 2011 Reported Adjustments: Adjustments: Adjustments: Adjustments: Adjustments: Corrected Page 3 of 3 (d) Total Current Assets 2009 2010 2011 Reported Adjustments: Adjustments: Adjustments: Adjustments: Adjustments: Corrected (e) Shareholders' Equity 2009 2010 2011 Reported Adjustments: Adjustments: Adjustments: Adjustments: Adjustments: Corrected...
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This note was uploaded on 12/29/2011 for the course MANAGEMENT MGTB05 taught by Professor Georgequanfun during the Fall '11 term at University of Toronto- Toronto.

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Chapter_8_inventory_review_question_part_2--_inventory_errors

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