During its first and second years of operations, Explorer Company, a corporation using a periodic inventory system, made undiscovered errors in taking its year-end inventories that understated Year 1 ending inventory by $120,000 and overstated Year 2 ending inventory by $165,000. The combined effect of these errors on reported income is: Select one: A. Year 1 Year 2 Year 3 Understated Overstated Not affected $120,000 $45,000 --- B. Year 1 Year 2 Year 3 Understated Overstated Not affected $120,000 $165,000 --- C. Year 1 Year 2 Year 3 Understated Overstated Understated $120,000 $285,000 $165,000 D. Year 1 Year 2 Year 3 Overstated Understated Overstated $80,000 $165,000 $45,000
During its first and second years of operations, Explorer Company, a corporation using a periodic inventory system, made undiscovered errors in taking its year-end inventories that understated Year 1 ending inventory by $120,000 and overstated Year 2 ending inventory by $165,000. The combined effect of these errors on reported income is: Select one: A. Year 1 Year 2 Year 3 Understated Overstated Not affected $120,000 $45,000 --- B. Year 1 Year 2 Year 3 Understated Overstated Not affected $120,000 $165,000 --- C. Year 1 Year 2 Year 3 Understated Overstated Understated $120,000 $285,000 $165,000 D. Year 1 Year 2 Year 3 Overstated Understated Overstated $80,000 $165,000 $45,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 3RE: Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of...
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During its first and second years of operations, Explorer Company, a corporation using a periodic inventory system, made undiscovered errors in taking its year-end inventories that understated Year 1 ending inventory by $120,000 and overstated Year 2 ending inventory by $165,000.
The combined effect of these errors on reported income is:
The combined effect of these errors on reported income is:
Select one:
A.
Year 1
|
Year 2
|
Year 3
|
Understated
|
Overstated
|
Not affected
|
$120,000
|
$45,000
|
---
|
B.
Year 1
|
Year 2
|
Year 3
|
Understated
|
Overstated
|
Not affected
|
$120,000
|
$165,000
|
---
|
C.
Year 1
|
Year 2
|
Year 3
|
Understated
|
Overstated
|
Understated
|
$120,000
|
$285,000
|
$165,000
|
D.
Year 1
|
Year 2
|
Year 3
|
Overstated
|
Understated
|
Overstated
|
$80,000
|
$165,000
|
$45,000
|
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