Incorrect correct 2009 december 31 usd 72600 usd

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Incorrect Correct 2009 December 31 USD 72,600 USD 86,200 2010 December 31 84000 70200 Prepare a schedule that shows: (a) the reported net income for each year, (b) the amount of correction needed for each year, and (c) the correct net income for each year. Problem B An examination of the financial records of Lanal Company on 2009 December 31, disclosed the following with regard to merchandise inventory for 2009 and prior years: 2005 December 31, inventory was correct. 2006 December 31, inventory was overstated USD 200,000. 2007 December 31, inventory was overstated USD 100,000. 2081 December 31, inventory was understated USD 220,000. 2009 December 31, inventory was correct. The reported net income for each year was: 2006 $384,000 2007 544,000 2008 670,000 2009 846,000 a. Prepare a schedule of corrected net income for each of the four years, 2006-2009. b. What error(s) would have been included in each December 31 balance sheet? Assume each year's error is independent of the other years' errors. c. Comment on the implications of your corrected net income as contrasted with reported net income. Problem C Brett Company sells personal computers and uses the specific identification method to account for its inventory. On 2010 November 30, the company had 46 Orange III personal computers on hand that were acquired on the following dates and at these stated costs: Units Unit cost July 3 10 @ $10,080 September 10 20 @ $ 9,600 November 29 16 @ $10,700 Brett sold 36 Orange III computers at USD 12,720 each in December. There were no purchases of this model in December. a. Compute the gross margin on December sales of Orange III computers assuming the company shipped those units that would maximize reported gross margin. b. Repeat part (a) assuming the company shipped those units that would minimize reported gross margin for December. c. In view of your answers to parts (a) and (b), what would be your reaction to an assertion that the specific identification method should not be considered an acceptable method for costing inventory? Problem D The inventory records of Thimble Company show the following: March 1 Beginning inventory consists of 10 units costing USD 40 per unit. 3 Sold 5 units at USD 94 per unit. 10 Purchased 16 units at USD 48 per unit. 12 Sold 8 units at USD 96 per unit. 20 Sold 7 units at USD 96 per unit. 25 Purchased 16 units at USD 50 per unit. 31 Sold 8 units at USD 96 per unit. Assume all purchases and sales are made on credit. Using FIFO perpetual inventory procedure, prepare the appropriate journal entries for March. Problem E The following purchases and sales for Ripple Company are for April 2010. There was no inventory on April 1. Purchases Sales Unit Units Cost Units April 3 3,200 @ $33.00 April 6 1,500 April 10 1,600 @ 34.00 April 12 1,400 April 22 2,000 @ 35.00 April 25 2,300 April 28 1,800 @ 36.00 a. Compute the ending inventory as of 2010 April 30, using perpetual inventory procedure, under each of the following methods: (1) FIFO, (2) LIFO, and (3) weighted-average (carry unit cost to four decimal places and round total cost to nearest dollar).

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