Assign_4_-_Solutions_to_Practice_Problem

From using lifo outweigh any negative impact of

Info icon This preview shows page 5. Sign up to view the full content.

View Full Document Right Arrow Icon
from using LIFO outweigh any negative impact of reporting a lower income to shareholders. Ex. 6–14 a. Balance Sheet Merchandise inventory ................ $12,000* overstated Current assets ............................. $12,000 overstated Total assets ................................. $12,000 overstated Stockholders’ equity (retained earnings) ................. $12,000 overstated *$12,000 = $350,000 – $338,000 b. Income Statement Cost of merchandise sold ............ $12,000 understated Gross profit .................................. $12,000 overstated Net income .................................. $12,000 overstated c. Income Statement Cost of merchandise sold ............ $12,000 overstated Gross profit .................................. $12,000 understated Net income .................................. $12,000 understated d. The December 31, 2013, balance sheet would be correct, since the 2012 inventory error reverses itself in 2013.
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern