The accountant for Suzanne Company made the following errors related to inventory in 2020: 1. The beginning inventory for 2020 was overstated by $1,375 due to an error in the physical count. 2. A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the ending inventory. Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors? Set Cost of Goods Sold Gross Profit Net Income I. Overstated Understated Understated II. Overstated Understated No effect III. Understated Overstated Overstated IV. No effect No effect No effect a. Set I b. Set II c. Set III d. Set IV
The accountant for Suzanne Company made the following errors related to inventory in 2020: 1. The beginning inventory for 2020 was overstated by $1,375 due to an error in the physical count. 2. A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the ending inventory. Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors? Set Cost of Goods Sold Gross Profit Net Income I. Overstated Understated Understated II. Overstated Understated No effect III. Understated Overstated Overstated IV. No effect No effect No effect a. Set I b. Set II c. Set III d. Set IV
Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter6: Accounting For Merchandising Businesses
Section: Chapter Questions
Problem 36E: The following data were extracted from the accounting records of Harkins Company for the year ended...
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Question
The accountant for Suzanne Company made the following errors related to inventory in 2020:
1. |
The beginning inventory for 2020 was overstated by $1,375 due to an error in the physical count. |
2. |
A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the ending inventory. |
Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors?
Set |
Cost of Goods Sold |
Gross Profit |
Net Income |
I. |
Overstated |
Understated |
Understated |
II. |
Overstated |
Understated |
No effect |
III. |
Understated |
Overstated |
Overstated |
IV. |
No effect |
No effect |
No effect |
|
a. |
Set I |
|
b. |
Set II |
|
c. |
Set III |
|
d. |
Set IV |
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