During the year 1 year-end physical inventory count at Tequesta Corporation, $40,000 worth of inventory was counted twice. Assuming that the year 2 year-end inventory was correct, the result of the year 1 error was that a. Year 1 retained earnings was understated, and year 2 ending inventory was correct. b. Year 1 cost of goods sold was overstated, and year 2 income was understated. c. Year 1 income was overstated, and year 2 ending inventory was overstated. d. Year 1 cost of goods sold was understated, and year 2 retained earnings was correct.

Q: If a group of inventory items costing $15,000 had been omitted from the year-end inventory count,…

A: Goods Available for Sale=Beginning Inventory+PurchasesCost of Goods Sold=Beginning…

Q: uring year 3, Paul Company discovered that the ending inventories reported on its financial…

A: Solution Concept When the ending inventory is understated the net income / retained earnings is…

Q: M7-17 Calculating Effect of Inventory Errors For each of the following scenarios, determine the…

A: The inventory needs to be recorded correctly as incorrect accounting of inventory would impact the…

Q: During its first and second years of operations, Explorer Company, a corporation using a periodic…

A: Inventory is one of the current asset of the business, which is reported in the balance sheet of the…

Q: Loire Co., a calendar year-end firm, has used the FIFO method of inventory measurement since it…

A: Retained Earnings is the part of profit which is not distributed to shareholders as dividend but…

Q: In taking a physical inventory at the end of Year 1, Grant Company forgot to count certain units and…

A: Given information is:  At the end of Year 1, Grant Company forgot to count certain units and…

Q: An error in the physical count of goods on hand at the end of the current period resulted in a $3000…

A: Any understatement of  ending inventory results in decrease in net income. In Trading Account…

Q: Assuming a company’s year-end inventory were overstated by $5,000, indicate the effect…

A: A) Cost of goods sold :  Suppose inventory at the start = $10,000, Purchases = $ 50,000 and…

Q: Wakowski Company's ending inventory was actually $86,000 but was adjusted and recorded at year end…

A: It is important that we do not over/understate assets in the Statement of Financial Position. We…

Q: The Northern Company installed a new inventory management system at the beginning of Year 1. Shown…

A: Inventory turnover = cost of goods sold / average inventory  Days sales in inventory = ending…

Q: Makisig company which uses the periodic system of recording inventory reported a net income of…

A: Formula: Net income = Sales - ( Beginning inventory + Purchases - Ending inventory ) Computation of…

Q: Bren Co.’s beginning inventory on January 1 was understated by $26,000, and its ending inventory on…

A:

Q: In taking a physical inventory at the end of Year 1, Grant Company forgot to count certain units and…

A: Here the situation is Grand company forgot to Count certain units and understated the ending…

Q: Company A recent required to record an inventory write down of $5,200 because the net realizable…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: For all exercises, assume the perpetual inventory system is used unless stated otherwise. Measuring…

A: a. Correct Cost of goods sold = Cost of goods sold + overstated Ending merchandise inventory =…

Q: If a group of inventory items costing $15,000 had been omitted from the year-end inventory count,…

A: The errors in inventory causes overstatement or understatement of inventory. When the ending…

Q: Assume that the total inventory on hand at the end of the year as determined by taking a physical…

A: Goods with the terms of FOB shipping point should not be included in the inventory till the goods…

Q: Ann M. Martin Company makes the following errors during the current year.    1.   Overstatement of…

A: Assets, liabilities and stockholders' equity are included in the balance sheet of the company.

Q: If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a…

A: If the inventory is shown as $68,000 instead of $86,000 which shows that the closing inventory is…

Q: Which of the following is correct when, in the same year, beginning inventory is overstated by…

A: The net income is calculated as difference between sales and total costs. Gross profit = Sales -…

Q: Charlie Day Co.’s beginning inventory at January 1 was understated by $26,000 and its ending…

A: The cost of goods sold is the cost of the product sold during the period.

Q: In taking a physical inventory at the end of Year 1, Grant Company forgot to count certain units and…

A: Year 1 cost of goods sold Increase by $17,500 Year 1 net income Decrease by $17,500 Year 2 cost…

Q: Smart Company prepared its annual financial statements dated December 31. The company reported its…

A: Under LCM/NRV approach, NRV of ending inventory is compared with the purchase cost and ending…

Q: Sun Co. uses a periodic inventory system. Beginning inventory on Jan. 1 was overstated by $32,000,…

A: Inventory: Inventory refers to the stock of goods purchased, utilized and maintained by the company…

Q: On December 31, 2010, Paperville computed an ending inventory valuation of $250,000. The accounts…

A: Closing / Ending Inventory Valuation = $250,000 (Adjusted and Clsoed)   Calculation of Ending…

Q: ABC company started its operations this year and began with no inventory on hand. It provided the…

A: The Numerical has covered the concept of weighted Average Methode Under Periodic Inventory Method.…

Q: Massi pharmacies, Inc. started operations on January 1 2X11. The company used the average cost…

A:

Q: Calla Company presented its cost of goods sold statements for the year ended December 31, 2016 with…

A: FOB Shipping Point In the FOB Shipping point method, When items are loaded into a delivery truck,…

Q: 2. Gabriela Company’s auditor discovered that the company inadvertently overstated ending Inventory…

A: Inventory means the goods in which the business deals. Inventory should be valued correctly  as it…

Q: : Which misstatement below is more difficult to detect? Explain. (i)The inventory costing $ 150,000…

A:

Q: Ebbers Corporation overstated its ending inventory balance by $15,000 in the current year. What…

A:

Q: The inventory at the end of the year was understatedby $14,750. (a) Did the error cause an…

A: (a)

Q: Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows: Year 1 Year 2 Beginning…

A: The ending inventory is the inventory left in hand at the end of the year.

Q: Lucia Company reported cost of goods sold for Year 1 and Year 2 as follows: Year 1 Year 2 Beginning…

A: Under the perpetual method, the inventory is tracked continuously. Alternatively, a perpetual…

Q: The following information was taken from the records of Tinker Enterprises: 2019 2018 Beginning…

A:

Q: es the periodic inventory method and the beginning inventory is overstated by $9,000 because the…

A:

Q: Assume that Audio Outfitter Inc. in Discussion Question 9 experienced an abnormal inventory…

A: Adjustment entry for abnormal inventory shrinkage:

Q: Navajo Company's year-end financial statements show the following. The company recently discovered…

A: The ending inventory is calculated as : Beginning inventory + Purchases - COGS

Q: If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a…

A: Solution: Small error in inventory valuation would cause a complete error in a financial statement.…

Q: The following information is presented for Marigold Corporation. The net income figures were…

A: Rectification of Error in Books of Accounts: Incorrect amount is reversed and  correct amount will…

Q: Clover Company, a corporation using a periodic inventory system, made undiscovered errors in taking…

A: Basic Accounting Concept Note for this question: Overstatement of Ending or Closing Inventory leads…

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.