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Analysis Case 9-6 (Static) Inventory errors [LO9-7] Eddie's Galleria sells billiard tables. The company has the following purchases and sales for 2024. Unit Cost Total Cost Date January 1 March 8 August 22 October 29 Transactions Beginning inventory Purchase $ 540 $ 81,000 570 Purchase Purchase 600 68,400 60,000 51,200 640 $ 260,600 Units 150 120 100 00 450 400 January 1 to December 31 Sales ($700 each) Eddie is worried about the company's financial performance. He has noticed an increase in the purchase cost of billiard tables, but at the same time, competition from other billiard table stores and other entertainment choices have prevented him from increasing the sales price. Eddie is worried that if the company's profitability is too low, stockholders will demand he be replaced. Eddie does not want to lose his job. Since 60 of the 400 billiard tables sold have not yet been picked up by the customers as of December 31, 2024, Eddie decides incorrectly to include these tables in ending inventory. He appropriately includes the sale of these 60 tables as part of total revenues in 2024 Required: 1. What amount will Eddie calculate for ending inventory and cost of goods sold using FIFO, assuming he erroneously reports that 110 tables remain in ending inventory? 2. What amount would Eddie calculate for cost of goods sold using FIFO if he correctly reports that only 50 tables remain in ending inventory? 3.& 4. What effect will the inventory error have on reported amounts for (a) ending inventory. (b) retained earnings, (c) Tost of goods sold, and (d) net income (ignoring tax effects) in 2024 and in 2025, assuming that ending inventory is correctly counted at the end of 2025?

Analysis Case 9-6 (Static) Inventory errors [LO9-7] Eddie's Galleria sells billiard tables. The company has the following purchases and sales for 2024. Unit Cost Total Cost Date January 1 March 8 August 22 October 29 Transactions Beginning inventory Purchase $ 540 $ 81,000 570 Purchase Purchase 600 68,400 60,000 51,200 640 $ 260,600 Units 150 120 100 00 450 400 January 1 to December 31 Sales ($700 each) Eddie is worried about the company's financial performance. He has noticed an increase in the purchase cost of billiard tables, but at the same time, competition from other billiard table stores and other entertainment choices have prevented him from increasing the sales price. Eddie is worried that if the company's profitability is too low, stockholders will demand he be replaced. Eddie does not want to lose his job. Since 60 of the 400 billiard tables sold have not yet been picked up by the customers as of December 31, 2024, Eddie decides incorrectly to include these tables in ending inventory. He appropriately includes the sale of these 60 tables as part of total revenues in 2024 Required: 1. What amount will Eddie calculate for ending inventory and cost of goods sold using FIFO, assuming he erroneously reports that 110 tables remain in ending inventory? 2. What amount would Eddie calculate for cost of goods sold using FIFO if he correctly reports that only 50 tables remain in ending inventory? 3.& 4. What effect will the inventory error have on reported amounts for (a) ending inventory. (b) retained earnings, (c) Tost of goods sold, and (d) net income (ignoring tax effects) in 2024 and in 2025, assuming that ending inventory is correctly counted at the end of 2025?

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 17MCQ: ( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory...
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Analysis Case 9-6 (Static) Inventory errors [LO9-7] Eddie's Galleria sells billiard tables. The company has the following purchases and sales for 2024. Transactions Date January 1 March 8 August 22 October 29 Beginning inventory Purchase Purchase Purchase Units 150 120 100 00 450 400 Unit Cost $ 540 570 600 640 Total Cost $ 81,000 68,400 60,000 51,200 $ 260,600 January 1 to December 31 Sales ($700 each) Eddie is worried about the company's financial performance. He has noticed an increase in the purchase cost of billiard tables, but at the same time, competition from other billiard table stores and other entertainment choices have prevented him from increasing the sales price. Eddie is worried that if the company's profitability is too low, stockholders will demand he be replaced. Eddie does not want to lose his job. Since 60 of the 400 billiard tables sold have not yet been picked up by the customers as of December 31, 2024, Eddie decides incorrectly to include these tables in ending inventory. He appropriately includes the sale of these 60 tables as part of total revenues in 2024. O Required: 1. What amount will Eddie calculate for ending inventory and cost of goods sold using FIFO, assuming he erroneously reports that 110 tables remain in ending inventory? 2. What amount would Eddie calculate for cost of goods sold using FIFO if he correctly reports that only 50 tables remain in ending inventory? 3. & 4. What effect will the inventory error have on reported amounts for (a) ending inventory, (b) retained earnings, (c) Tost of goods sold, and (d) net income (ignoring tax effects) in 2024 and in 2025, assuming that ending inventory is correctly counted at the end of 2025?
Transcribed Image Text:Analysis Case 9-6 (Static) Inventory errors [LO9-7] Eddie's Galleria sells billiard tables. The company has the following purchases and sales for 2024. Transactions Date January 1 March 8 August 22 October 29 Beginning inventory Purchase Purchase Purchase Units 150 120 100 00 450 400 Unit Cost $ 540 570 600 640 Total Cost $ 81,000 68,400 60,000 51,200 $ 260,600 January 1 to December 31 Sales ($700 each) Eddie is worried about the company's financial performance. He has noticed an increase in the purchase cost of billiard tables, but at the same time, competition from other billiard table stores and other entertainment choices have prevented him from increasing the sales price. Eddie is worried that if the company's profitability is too low, stockholders will demand he be replaced. Eddie does not want to lose his job. Since 60 of the 400 billiard tables sold have not yet been picked up by the customers as of December 31, 2024, Eddie decides incorrectly to include these tables in ending inventory. He appropriately includes the sale of these 60 tables as part of total revenues in 2024. O Required: 1. What amount will Eddie calculate for ending inventory and cost of goods sold using FIFO, assuming he erroneously reports that 110 tables remain in ending inventory? 2. What amount would Eddie calculate for cost of goods sold using FIFO if he correctly reports that only 50 tables remain in ending inventory? 3. & 4. What effect will the inventory error have on reported amounts for (a) ending inventory, (b) retained earnings, (c) Tost of goods sold, and (d) net income (ignoring tax effects) in 2024 and in 2025, assuming that ending inventory is correctly counted at the end of 2025?
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