Required: 1. Prepare the income statements to reflect the correct amounts, taking into consideration the inventory error.
Q: How do inventory errors affect the financial statements.
A: The financial statements of the business includes the income statement and balance sheet.
Q: What is the amount of Inventory to be presented at the Balance Sheet date using the LCNRV Individual…
A: Solution Concept FIFO method : Under this method the goods in opening inventory is sold first LCNRV…
Q: Changing the method of inventory valuation should be reported in the financial statements under what…
A: Inventory- A manufacturing company's inventory is a critical current asset. Inventory refers to the…
Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…
A: Solution Concepts Purchase account is an expense and if it is understated profit will increase and…
Q: Under the perpetual inventory system, increases and decreases in inventory are recorded through the…
A: Solution: Under perpetual inventory system, inventory records are updated with every purchase and…
Q: If the net realizable of an entity's inventories is less than its cost, the entry to adjust the…
A: Introduction: Under the lower of cost or net realizable value (LCNRV) method, if net selling price…
Q: According to the expense recognition principle, inventory costs are expensed as cost of goods sold…
A: True
Q: Indicate the effects of inventory errors on the financial statements
A: Solution- 1-A merchandising company must be sure that it has properly valued its ending inventory.…
Q: What is inventory shrinkage? Describe the adjusting entry that would be recorded to account for…
A: Inventory shrinkage: When there is a difference between inventory as per books and actual inventory…
Q: How is the allowance for the inventory write-down shown in the statement of financial position? a.…
A: Inventory means the stock of goods in hand . Goods means is the thing in which the business deals…
Q: is a measure of inventory profitability that relates a gross margin to the cost of the inventory.
A: Inventory profitability means profits related to inventory cost which are calculated using these two…
Q: Explain the appropriate accounting treatment required when a change in inventory method is made.
A: Definition: Change in inventory method: Change in inventory method is said to be the difference…
Q: T, F. Under the GAAP rule, inventories can be reported at above cost in the balance sheet. T, F. If…
A: Under GAAP rules , inventory is valued at cost or net realizable value which ever is lower due to…
Q: Which inventory method is being used when the natural flow of goods is followed? a.) Specific ID b.)…
A: Inventory Valuation: - This is defined as the valuation wherein the changes between the value of the…
Q: When inventory is held on consignment it should be? Derecognized Reported as cost of goods sold…
A: Solution: When inventory is held on consignment it should be "Derecognized" as inventory is not…
Q: What type of account is Merchandise Inventory and on which financial statement is it found? Does it…
A: Merchandise inventory means goods or stock that the business has in its books or in its stock. This…
Q: True or false If transportation costs are the responsibility of the buyer, they should be added to…
A: Correct answer-True
Q: What are the key factors that can lead to an under/overstatement of the inventory balance?
A: Answer: Inventory balances are sometimes overstated and sometimes understated.
Q: nsidered when not only counting inventory, but likewise in the final valuation of inventory? Why is…
A: Inventory is the goods lying in the stock of the entity which is either purchased or produced, ready…
Q: Under the perpetual inventory system, cost of goods sold is debited when inventory is sold and…
A: Solution: Under perpetual inventory system, inventory is updated with every purchase and sales. Cost…
Q: Which method tracks the actual physical flow of goods and each item of inventory is marked, tagged,…
A: The correct option in no. 1 question is d. Specific identification method
Q: 4. Using the FIFO method, the most recent purchases of inventory are assumed to be contained: a. on…
A: Under FIFO method, units purchased earlier are assumed to be sold first and the ending inventory…
Q: Importance of Inventory Valuation What needs to be considered when not only counting inventory, but…
A: SOLUTION- INVENTORY IS GOODS LYING IN THE STOCK OF THE ENTITY WHICH IS EITHER PURCHASED OR…
Q: Compute the correct amount of inventory.
A: Inventory is the stock which the company has in order to sell them in the normal course of the…
Q: what are the effects of inventory errors on the financial statements
A: Incorrect recording of Inventory balance results in the Inventory errors.
Q: How does an inventory error effect the financial statements?
A: Inventory error: Inventory errors are sometimes caused by making mistake in physical count, in…
Q: An overstatement of ending inventory results in: Select one: a. an understatement of COGS and an…
A: option a is the correct answer.
Q: Explain what is meant by the cost rule or net realizable value, whichever is less, and how it is…
A: As per IAS -02 inventory should be measured on cost or Net realizable value whichever is lower.…
Q: Explain briefly the application of the LCM rule to ending inventory. Describe its effect on the…
A:
Q: Describe the accounting treatment for a change in inventory method other than to LIFO.
A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…
Q: Explain the accounting treatment of material inventory errors discovered in an accounting period…
A: Materials inventory: Material inventories are the primary materials which are used in the…
Q: Explain the appropriate accounting treatment required when an inventory error is discovered.
A: Assets: These are the resources owned and controlled by business and used to produce benefits for…
Q: 1. Before inventory purchases are recorded, the receiving report should be reconciled to what…
A: Inventory: Inventory refers to the raw materials, work in progress, and finished goods that are held…
Q: Provide a critique of the accounting policy for inventory included in the financial statement in…
A: The accounting standard prescribes the accounting treatment for inventories and sets the guidelines…
Q: Cost of goods available for sale consist of two elements: beginning inventory and ending inventory…
A: Introduction: Beginning inventory: Inventory value at the beginning of the accounting period called…
Q: Explain the following statement: “Inventory errors correct themselves.”
A: Solution: Introduction: Inventory means goods are available for sale and raw materials used in the…
Q: nventory valuation is used to calculate the cost of goods sold and cost of ending inventory. The…
A: First in First out Method This is one of the popular method of inventory valuation. While using…
Q: Which of the following inventory method measures most closely the current cost of inventory? a.…
A: The inventory valuation is carried out at the end of the accounting period. The different inventory…
Q: 3. Indicate the effect of the following errors on gross profit and cost of goods sold (COGS), i.e.,…
A: Cost of goods sold (COGS)- The cost incurred on the goods sold during the period is referred to as…
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- Prince Corporations accounts provided the following information at December 31, 2019: What should be the current balance of retained earnings? a. 520,000 b. 580,000 c. 610,000 d. 670,000Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Refer to the information for Juroe Company on the previous page. Also, assume that Juroes total assets at the beginning of last year equaled 17,350,000 and that the tax rate applicable to Juroe is 40%. Required: Note: Round answers to two decimal places. 1. Calculate the average total assets. 2. Calculate the return on assets.The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. You have been asked to prepare a statement of cash flows for Prime Sports Gear for 2013. Review the worksheet called CASHFLOW that has been provided to assist you in preparing the statement. The worksheet has been designed so that as you make entries in columns D and F, column G will be automatically updated. For example, FORMULA1 should be entered as =B17+D17F17. Columns C and E are to be used to enter letter references for each of the debit and credit entries on the worksheet.
- The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. Open the file CASHFLOW from the website for this book at cengagebrain.com. First, enter the formulas. Then, complete the worksheet in the manner described next. According to the problem, cash increased from 39,600 to 67,210 during the year. This is a 27,610 increase. To record this increase on the worksheet, move to row 17. Since this is the first account you are analyzing, enter the letter a in column C. Then enter 27610 in column D (a debit since cash increased). This brings the year-end balance (column G) to 67,210, its proper balance. Now move to the bottom part of the statement where you see the categories Operating Activities, Investing Activities, and so on. The credit side of the entry has to be entered here. The proper space for this cash entry is on row 59. Enter the letter a in cell E59 and 27610 in cell F59. Notice the totals at the bottom of the page (row 60) now agree. The next account balance that changed is accounts receivable. It increased by 9,035. To enter this change on the worksheet, enter the letter b in cell C18 and 9035 in cell D18 (again, a debit since accounts receivable increased). This brings the year-end balance in column G to 121,250, its proper balance. The change in accounts receivable balance is an operating activity adjustment (as explained in your textbook). Enter the credit side of this entry in cells E34 and F34, and enter the explanation Increase in accounts receivable in cell A34. Note: Your textbook probably shows Net income as the first item under Operating Activities. We will get to that later. The sequence in which you enter items on this worksheet is not important. All other balance sheet accounts must be analyzed in the same manner, placing appropriate debit or credit entries in the top part of the worksheet to obtain the proper balances in column G, and then entering the second side of the entry in the appropriate row on the bottom part of the worksheet. You should use letter references to identify all entries. Also, you must enter a description of the entry in column A under the appropriate activity category. Although a sequence of analyzing the balance sheet from top to bottom is suggested here, this order is not necessary. As mentioned earlier, your textbook may specify a different sequence. Also, note that some accounts may have both debit and credit adjustments to them. The worksheet is not a substitute for a statement of cash flows, but it does provide you with all the numbers you need to properly prepare one. You will be done with your analysis when: a. The individual account balances at December 31, 2013, as shown on the worksheet (column G) equal those shown in the given problem data. b. The transaction column totals are equal (cells D60 and F60). c. The sum of the operating, investing, and financing activities (cell G59) equals the change in cash (cell D59 or F59). When you are finished, enter your name in cell A1. Save your completed file as CASHFLOW2. Print the worksheet when done. Also print your formulas. Check figure: Total credits at 12/31/2013 (cell G31), 860,460.Forecast an Income Statement Following is the income statement for Medtronic PLC for the year ended April 29, 2016. Consolidated Statements of Income Apr. 29, 2016 Net sales $29,721 Costs and expenses Cost of products sold 9,214 Research and development expense 2,224 Selling, general, and administrative expense 9,469 Special charges (gains), net 70 Restructuring charges, net 290 Certain litigation charges, net 26 Acquisition-related items 283 Amortization of intangible assets 1,931 Other expense, net 107 Operating profit 6,107 Interest expense, net 955 Income from operations before income taxes 5,152 Provision for income taxes 979 Net income $4,173 Use the following assumptions to prepare a forecast of the company's income statement for FY2017. Net sales increase 18% Cost of products sold 31.7% of net sales Research and development expense 7.7% of net sales Selling, general, and administrative expense 32.8% of net sales…Given the historical income statement of Mega Trade Inc., how much would be added to the company's retained earning for the year 2016 (in millions)? Income Statement ( $ Million) Year End 2015 2016 2017 2019 Sales 1, 234.90 1,251.70 1,300.40 1,334.40 Cost of Sales -679.1 -659 -681.3 -667 Gross Operating Income Selling & Administration -339.7 -348.6 -351.2 -373.3 Depreciation -47.5 -52 -55.9 -75.2 Other Income / Expenses 11.8 7.6 7 8.2 Earnings Before Interest and Taxes Interest Income 1.3 1.4 1.7 2 Interest Expense -16.2 -15.1 -20.5 -23.7 Pre Tax Income Income Taxes -56.8 -64.2 -67.5 -72.6 Net Income Dividends -38.3 -38.7 -39.8 -40.1
- Given the historical income statement of Mega Trade Inc., how much would be added to the company's retained earning for the year 2016 (in millions)? Income Statement ($ Million) Income Statement ( $ Million) Year End 2015 2016 2017 2019 Sales 1, 234,90 1,251.40 1,300.40 1,334.40 Cost of Sales -679.1 -659 -681.3 -667 Gross Operating Income Selling & Administration -339.7 -348.6 -351.2 -373.3 Depreciation -47.5 -52 -55.9 -75.2 Other Income / Expenses 11.8 7.6 7 8.2 Earnings Before Interest and Taxes Interest Income 1.3 1.4 1.7 2 Interest Expense -16.2 -15.1 -20.5 -23.7 Pre Tax Income Income Taxes -56.8 -64.2 -67.5 -72.6 Net Income Dividends -38.3 -38.7 -39.8 -40.1Assume Nordstrom Inc. reports net income of $667 million for its fiscal year ended January 2016. At the beginning of that fiscal year, Nordstrom had $9,467 million in total assets. By fiscal year ended January 2016, total assets had decreased to $7,920 million. What is Nordstrom's ROA?Sarasota Corp.’s income statement contained the condensed information below. Sarasota Corp.Income StatementFor the Year Ended December 31, 2022 Service revenue $2,231,000 Operating expenses, excluding depreciation $1,412,200 Depreciation expense 126,500 Loss on disposal of plant assets 36,800 1,575,500 Income before income taxes 655,500 Income tax expense 128,800 Net income $526,700 Sarasota Corp.’s balance sheets contained the following comparative data at December 31. 2022 2021 Accounts receivable $161,000 $138,000 Accounts payable 94,300 73,600 Income taxes payable 29,900 16,100 Accounts payable pertain to operating expenses.Prepare the operating activities section of the statement of cash flows using the direct method.
- Zumbrunn Company’s income statement contained the following condensed information. ZUMBRUNN COMPANYIncome StatementFor the Year Ended December 31, 2020 Service revenue $971,400 Operating expenses, excluding depreciation $623,600 Depreciation expense 55,900 Loss on disposal of plant assets 24,600 704,100 Income before income taxes 267,300 Income tax expense 39,600 Net income $227,700 Zumbrunn’s balance sheets contained the comparative data at December 31, shown below. 2020 2019 Accounts receivable $74,500 $59,000 Accounts payable 41,600 28,800 Income taxes payable 10,600 6,800 Accounts payable pertain to operating expenses.Prepare the operating activities section of the statement of cash flows using the direct method.Selected information about income statement accounts for the Reed Company is presented below (the company's fiscal year ends on December 31): 2024 2023 Sales revenue $ 5,300,000 $ 4,400,000 Cost of goods sold 3,040,000 2,180,000 Administrative expense 980,000 855,000 Selling expense 540,000 482,000 Interest revenue 168,000 158,000 Interest expense 236,000 236,000 Loss on sale of assets of discontinued component 120,000 — On July 1, 2024, the company adopted a plan to discontinue a division that qualifies as a component of an entity as defined by GAAP. The assets of the component were sold on September 30, 2024, for $120,000 less than their book value. Results of operations for the component (included in the above account balances) were as follows: 1/1/2024–9/30/2024 2023 Sales revenue $ 580,000 $ 680,000 Cost of goods sold (380,000) (428,000) Administrative expense (68,000) (58,000) Selling expense (38,000) (38,000) Operating income before taxes…