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Unformatted text preview: released. The CFO proposed to correct the error by debiting Cost of Goods Sold and crediting Inventory for $90,000. Net income for 20X3 was $900,000, and 20X4 should be at about the same level. (a) What is the appropriate journal entry to correct the error? You may assume the firm uses a periodic inventory system, and the balance of the Inventory account is shown as $1,760,000. (b) In the CFO presentation to potential investors, how much should be reported as 20X3 net income? How much should be reported as inventory on hand at December 31, 20X3? (c) Is the amount of the error material? If you are an accountant for Roll Call and instructed by the CFO to record the erroneous entry, what should you do?...
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This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.
- Spring '11