In 2016, the internal auditors of Development Technologies, Inc. discovered that a $4 million purchase of merchandise in 2016 was recorded in 2015 instead. The physical inventory count at the end of 2015 was correct. Required: Prepare the journal entry needed in 2016 to correct the error. Also, briefly describe any other measures Development Technologies would take in connection with correcting the error. (Ignore income taxes.)

Q: Sanborn Inc. is a new manufacturing company founded on February 2, 2012. The company had to choose…

A: FIFO: FIFO stands for First-In, First-Out.  In this method inventory purchased first will be sell…

Q: The following inventory valuation errors have been discovered for Knox Corporation: The 2015…

A: Inventory errors: It refers to the errors that result in overstatement or understatement of ending…

Q: Whaley Distributors is a wholesale distributor of electronic components. Financial statements for…

A: The answer is stated below:

Q: E6-2 Farley Bains, an auditor with Nolls CPAs, is performing a review of Ryder Company's nventory…

A: Step 1 Inventory cost must be determined to find the correct value of product

Q: During 2016, WMC Corporation discovered that its ending inventories reported on its financial…

A: 1.

Q: In an audit of Ingenious Company for the year ended December 31, 2013, the entity took its annual…

A: Inventory refers to the raw materials utilised in manufacturing as well as the finished goods that…

Q: It is discovered in 2016 that ending inventory in 2014 was understated. What is the effect of the…

A: The effect of the understatement in 2014 on: Cost of goods sold: The understated ending inventory…

Q: Kari Downs, an auditor with Wheeler CPAs, is performing a review of Waterway Company’s inventory…

A: SOLUTION-   INVENTORY- IT IS A TERM FOR GOODS AVAILABLE FOR SALE AND RAW MATERIAL USED TO PRODUCE…

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 your audit of Joseph Moore Company, you find that a physical inventory on December 31, 2020,…

A: FOB destination: When the seller bears the freight charges for the delivery of merchandise from the…

Q: Farley Bains, an auditor with Nolls CPAs, is performing a review of Splish Brothers Inc.’s Inventory…

A: Prepare a schedule for determining correct inventory as shown below:

Q: Bridgeport Co. reported before-tax income of $427,000 in 2017 and $323,000 for 2018. However, the…

A: In order to calculate the corrected income before taxes for 2017 and 2018, all the errors effecting…

Q: In 2016, the internal auditors of Development Technologies, Inc., discovered that (a) 2015 accrued…

A:

Q: Rhazel Company whose fiscal year ends on November 30, is in the process of negotiating a loan for…

A: The monetary benefit or reward earned by an individual or business by producing goods or services,…

Q: During 20Y5, the accountant discovered that the physical inventory at the end of 20Y4 had been…

A:

Q: Farley Bains, an auditor with Nolls CPAs, is performing a review of Waterway Company’s Inventory…

A: Prepare a schedule to determine the correct inventory amount as shown below:

Q: Speaker Company has determined its 2014 and 2015 net income figures to be P1,150,000 and P1,100,000,…

A: Corrected Net Income for the year 2015:   Particulars…

Q: In March 2018, Blue Devil Company realized that they had overstated their December 2016 ending…

A: Inventory: Inventory are raw materials, work-in-process, finished goods and other stocks. The stock…

Q: You are auditing the financial statement of Pasig You have discovered that the merchandise inventory…

A: Errors include omisssions. impact of previous year errors will also consider for correction of…

Q: Rachel Warren, an auditor with Laplante CPAS, is performing a review of Pina Colada Corp.'s…

A: No. Ending Inventory - As reported Reason 1. Included in the company’s count were goods with…

Q: Whaley Distributors is a wholesale distributor of electronic components. Financial statements for…

A: Patents are amortized using straight line method as there is no information regarding amortization…

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

A: 1.

Q: Lindy Company's auditor discovered two errors. No errors were corrected during 2017. The errors are…

A: Periodic Inventory System:- It is the form of an inventory valuation system where the physical count…

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: 6) After the ISsuance of the 2023 financial statements, Orange Company discovered a computational…

A: solution : error : overstatement of cost of goods sold for the year ended december 31 ,2023 the…

Q: Based on its physical count of inventory in its warehouse at year-end, December 31, 2014, Madison…

A: Ending inventory is the amount of inventory that an entity has, at the end of a period. It is…

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

A: Inventory errorInventory errors are sometimes caused by making mistake in physical count, in pricing…

Q: The following is an independent error made by a company that uses the periodic inventory system:…

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: Rhazel Company whose fiscal year ends on November 30, is in the process of negotiating a loan for…

A: Net Income as per Audited financial statements  450000

Q: Farley Bains, an auditor with Nolls CPAS, is performing a review of Teal Mountain Inc.'s Inventory…

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

Q: On April 1, 2020, you were hired by Binus Inc., a closely held company, as a staff member of its…

A: The inventory is presented in the balance sheet under the head current assets. Whereas, the cost of…

Q: The audit of Joust Company revealed a physical inventory on December 31, 2014 with a cost of…

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

Q: As a result of taking a physical inventory count on December 31, 2016, the Mona Lisa Company…

A: Closing stock: It is the value of unsold goods at the end of an accounting period is termed as…

Q: What should be reported as the correct 2029 pretax income?

A: Reporting Correct Income is very much necessary and its Possible that some adjustments must be made…

Q: During 2016, WMC Corporation discovered that its ending inventories reported in its financial…

A: 1.The effects of inventory error of understated ending inventory of $200,000 in 2014.In the year…

Q: During 2014, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that…

A: The financial position of the company can be arrived from the income statement prepared by the…

Q: Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for the year ended 31…

A: Audit Opinion is divided into four types: a) Unqualified opinion b) Qualified Opinion c) Adverse…

Q: The accountant for Angie Company made the following errors related to purchases of merchandise and…

A: Periodic Inventory System means a system of recording and calculating inventory at the end of…

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.