Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $733,900 instead of the correct amount of $755,920. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 20Y2, balance sheet of Missouri River Supply. Balance Sheet Items Understated/Overstated Amount Merchandise Inventory $ Current Assets Total Assets Owner's Equity b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 20Y2. Income Statement Items Overstated/Understated Amount Cost of Merchandise Sold $ Gross Profit Net Income c. If uncorrected, what would be the effect of the error on the 20Y3 income statement? Income Statement Items Overstated/Understated Amount Cost of Merchandise Sold $ Gross Profit Net Income d. If uncorrected, what would be the effect of the error on the December 31, 20Y3, balance sheet? The December 31, 20Y3, balance sheet would be correct, since the 20Y2 inventory error reverses itself in 20Y3. The December 31, 20Y3, balance sheet would be incorrect, since the 20Y2 inventory error overstates the beginning inventory in20Y3. The December 31, 20Y3, balance sheet would be incorrect, since the 20Y2 inventory error understates the beginning inventory in 20Y3.

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Description: Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $733,900 instead of the correct

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 13E: The following are independent errors made by a company that uses the periodic inventory system: a....

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Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $733,900 instead of the correct amount of $755,920.

Enter all amounts as positive numbers.

a. State the effect of the error on the December 31, 20Y2, balance sheet of Missouri River Supply.

Balance Sheet Items	Understated/Overstated	Amount
Merchandise Inventory		$
Current Assets
Total Assets
Owner's Equity

b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 20Y2.

Income Statement Items	Overstated/Understated	Amount
Cost of Merchandise Sold		$
Gross Profit
Net Income

c. If uncorrected, what would be the effect of the error on the 20Y3 income statement?

Income Statement Items	Overstated/Understated	Amount
Cost of Merchandise Sold		$
Gross Profit
Net Income

d. If uncorrected, what would be the effect of the error on the December 31, 20Y3, balance sheet?

The December 31, 20Y3, balance sheet would be correct, since the 20Y2 inventory error reverses itself in 20Y3.
The December 31, 20Y3, balance sheet would be incorrect, since the 20Y2 inventory error overstates the beginning inventory in20Y3.
The December 31, 20Y3, balance sheet would be incorrect, since the 20Y2 inventory error understates the beginning inventory in 20Y3.

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