Inventory error Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet. To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

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Answer 1

Question

Chapter 20, Problem 20.12BYP

1

To determine

Inventory error

Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet.

To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

2

To determine

The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

3

To determine

To Discuss: The ethical dilemma faced by J.

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Answer 2

Question

Chapter 20, Problem 20.12BYP

1

To determine

Inventory error

Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet.

To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

2

To determine

The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

3

To determine

To Discuss: The ethical dilemma faced by J.

Expert Solution & Answer

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Answer 3

Question

Chapter 20, Problem 20.12BYP

1

To determine

Inventory error

Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet.

To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

2

To determine

The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

3

To determine

To Discuss: The ethical dilemma faced by J.

Expert Solution & Answer

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Answer 4

Question

Chapter 20, Problem 20.12BYP

1

To determine

Inventory error

Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet.

To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

2

To determine

The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

3

To determine

To Discuss: The ethical dilemma faced by J.

Expert Solution & Answer

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Answer 5

Chapter 20, Problem 20.12BYP

1

To determine

Inventory error

Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet.

To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

2

To determine

The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

3

To determine

To Discuss: The ethical dilemma faced by J.

Answer 6

Chapter 20, Problem 20.12BYP

1

To determine

Inventory error

Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet.

To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

Answer 7

Chapter 20, Problem 20.12BYP

1

To determine

Inventory error

Inventory errors are sometimes caused by making mistake in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as balance sheet.

To Identify: The reason behind the bonuses which will be negatively affected and the effect on pretax earnings.

Answer 8

2

To determine

The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

Answer 9

2

To determine

The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

Answer 10

3

To determine

To Discuss: The ethical dilemma faced by J.

Answer 11

3

To determine

To Discuss: The ethical dilemma faced by J.

Answer 12

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Answer 14

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Answer 15

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Solution Summary: The author explains the reason behind the negative impact in the bonuses of Company D if they are corrected, and the ethical dilemma faced by J.

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The way the error will be reported in the company’s financial statement if it is discovered by the auditors in the next year’s audit.

To Discuss: The ethical dilemma faced by J.

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