During 2016, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: 2014 understated by $120,000 2015 overstated by 150,000 WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2016, before any adjustments. Explain your answer. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors. 3. What other step(s) would be taken in connection with the correction of the errors?

Q: Jackson Specialties has been in business for more than 50 years. The company maintains a per-petual…

A: LIFO stands for Last in first out. It is one of the important inventory management techniques. Under…

Q: Berkshire Inc. uses a periodic inventory system. At the end of 2020, it missed counting some…

A: Periodic inventory system is an inventory system under which all purchase and sale of inventories…

Q: Gordon Company started operations on January 1, 2015, and has used the FIFO method of inventory…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: On December 31, 2017, Paiva, Inc. appropriately changed its inventory valuation method to…

A: When there is a change in accounting policy or method of calculation of inventory then the amount of…

Q: BUDOTS Company reported current assets of P3,900,000 and current liabilities of P2,000,000 on its…

A: Under FOB destination, titles of goods are transferred to the buyer only when goods are delivered to…

Q: Penn Company is in the process of adjusting and correcting its books at the end of 2020. In…

A: Prepare the journal entries.

Q: In 2016, CPS Company changed its method of valuing inventory from the FIFO method to the average…

A: 1.

Q: In 2021, the internal auditors of Development Technologies, Inc., discovered that a $4.5 million…

A: Journal entries are the primary method for recording financial transactions in the books of…

Q: Houghton Limited is trying to determine the value of its ending inventory as of February 28, 2022,…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Cambi Company began operations on January 1, 2016. In the second quarter of 2017, it adopted the…

A:

Q: In 2018, the Barton and Barton Company changed its method of valuing inventory from the FIFO method…

A:

Q: In 2021, the Barton and Barton Company changed its method of valuing inventory from the FIFO method…

A: Change in the method of inventory valuation: Changing the method of inventory valuation is a change…

Q: Ignoring income tax considerations, prepare the entry to report this accounting change.

A: Given are the inventory values for year 2016 and 2017 as per LIFO method and FIFO method.

Q: BTS, Inc. has adopted a new accounting system for measuring the value of its inventory from weighted…

A: Lets understand the basics. There are two types of changes happens in the accounting which are, (1)…

Q: Flay Foods has always used the FIFO inventory costing method for both financial reporting and tax…

A: 1. Prepare journal entry to record the change in value of inventory value.

Q: In 2018, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of2017…

A:

Q: BUDOTS Company reported current assets of P3,900,000 and current liabilities of P2,000,000 on its…

A: Current Ratio = Current Assets / current liabilities   Current Assets = 3,900,000 Current…

Q: During its second and third quarters of fiscal 2014, BlackBerry Limited wrote down its…

A: Accounting equation:   Accounting equation is an accounting tool expressed in the form of equation,…

Q: Rios Inc, uses International Financial Reporting Standards (IFRS). In 2018, Rios Inc. experienced a…

A: Solution:- The following will Rios, Inc. record in 2019 as follows under:- Introduction:- Findings:-…

Q: Goddard Company has used the FIFO method of inventory valuation since it began operations in 2013.…

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: Tretorn Company began operations in 2018. During the first two years of operations, Tretorn made…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: You have been hired as the new controller for the Ralston Company. Shortly after joining the company…

A: 1.

Q: Dover Company began operations in 2015 and determined its ending inventory at cost and at a LCNRV at…

A: c) Under both the methods, the same amount has been adjusted against either cost of goods sold /loss…

Q: In 2021, the Barton and Barton Company changed its method of valuing inventory from the FIFO method…

A: The question is based on the concept of Journal Entry.

Q: In 2021, the internal auditors of Development Technologies, Inc., discovered that a $5.6 million…

A: Given that, During the audit of 2021, $5.6 Million purchase of merchandise in 2021 was recorded in…

Q: In 2016, the controller of Sytec Corporation discovered that $42,000 of inventory purchases were…

A: Determine the effects of the errors on retained earnings at January 1, 2016.In the year 2015, the…

Q: at December 31, 2016, Stevenson Company overstated ending inventory by $36,000. How does this error…

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Q: Webster Products, Inc., adopted the dollar-value LIFO method of determining inventory costs for…

A: Inventory costing method:The costing method that is used to record the cost of goods sold, and…

Q: In 2021, the controller of Sytec Corporation discovered that $42,000 of inventory purchases were…

A: 1. Determine the effects of the errors on retained earnings at January 1, 2021. In the year 2020,…

Q: Goddard Company has used the FIFO method of inventory valuation since it began operations in 2018.…

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2…

A: 1. Compute the correct Net Income for the years 2018 and 2019, after the errors are corrected.

Q: Lumen INC. is preparing its 2021 year-end financial statements. Prior to any adjustments, inventory…

A: Closing value of inventory is very much necessary for the company to compute as it helps the company…

Q: On January 1, 2018, Devoe Company changed from the FIFO method to the average cost method to account…

A: Net Income: Net income (also consolidated income, net earnings, net profit, bottom line, sales…

Q: Berkshire Inc. uses a periodic inventory system. At the end of 2020, it missed counting some…

A: Tax saved on understated inventory = understated inventory x tax rate = 600000 x 25% = $150,000

Q: The Cecil-Booker Vending Company changed its method of valuing inventory from the average cost…

A: 1.

Q: Flint Corp. began operations in 2014. During the years 2014-2016, it reported net income and…

A: Note 1 - Working for Retained Earnings as on January 1st , 2017 2014 - Net Income - before…

Q: compute the correct amount of inventory to be reported in the statement of financial position on…

A:

Q: Tony Company began operations in 2012. During the first two years of operations, the company made…

A: Computation of Income: Gross Profit = Sales – COGS COGS = Opening Inventory + Purchases – Closing…

Q: The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost…

A:

Q: At December 31, 2016, McGlaggen Corporation reported current assets of $638,000 and current…

A: SOLUTION-A        COMPUTATION THE CURRENT RATIO BASED ON MCGLAGGENS BALANCE SHEET   CURRENT RATIO =…

Q: A company reported the net income of $58,000 for the year ending 2018. However, it was discovered…

A: Net income:Net income can be defined as the income reported at the bottom of the income statement of…

Q: retorn Company began operations in 2018. During the first two years of operations, Tretorn made…

A: Solution 2: reported income for the year 2018 = Understated by 40000 as ending inventory is…

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.