In 2021, the controller of Sytec Corporation discovered that $42,000 of inventory purchases were incorrectly charged to advertising expense in 2020. In addition, the 2020 year-end inventory count failed to include $30,000 of company merchandise held on consignment by Erin Brothers. Sytec uses a periodic inventory system. Other than the omission of the merchandise on consignment, the year-end inventory count was correct. The amounts of the errors are deemed to be material. Required:1. Determine the effect of the errors on retained earnings at January 1, 2021. 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?
In 2021, the controller of Sytec Corporation discovered that $42,000 of inventory purchases were incorrectly charged to advertising expense in 2020. In addition, the 2020 year-end inventory count failed to include $30,000 of company merchandise held on consignment by Erin Brothers. Sytec uses a periodic inventory system. Other than the omission of the merchandise on consignment, the year-end inventory count was correct. The amounts of the errors are deemed to be material.
Required:
1. Determine the effect of the errors on
2. Prepare a
3. What other step(s) would be taken in connection with the correction of the errors?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
