Inventory Errors
McLelland Inc. reported net income of $175,000 for 2019 and $210,000 for 2020. Early in 2020, McLelland discovers that the December 31, 2019 ending inventory was overstated by $20,000. For simplicity, ignore taxes.
Required:
1. What is the correct net income for 2019? For 2020?
2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020?
Concept introduction:
Requirement 1:
To calculate:
The correct amount of net income for the year 2019 and 2020.
The correct amount of net income for the year 2019 and 2020 is calculated as follows:
Mclelland Inc. | ||
Year 2019 | Year 2020 | |
Concept introduction:
Requirement 2:
To indicate:
The effect of error on the balance sheet for the year 2019 and 2020.
Corporate Financial Accounting
Accounting Information Systems
Financial & Managerial Accounting
Foundations of Business (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Principles of Microeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Probability and Statistics for Engineering and the Sciences
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Essentials of Business Communication (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Principles of Economics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
Financial And Managerial Accounting
A Guide to SQL
Database Systems: Design, Implementation, & Management
Database Systems: Design, Implementation, & Management
Principles of Information Systems (MindTap Course List)
Fundamentals of Information Systems
Principles of Information Security (MindTap Course List)
Fundamentals of Information Systems
Fundamentals of Geotechnical Engineering (MindTap Course List)
Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)
Principles of Information Systems (MindTap Course List)
Mechanics of Materials (MindTap Course List)
Precision Machining Technology (MindTap Course List)
Automotive Technology: A Systems Approach (MindTap Course List)
Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)
Management Of Information Security
Principles of Geotechnical Engineering (MindTap Course List)
Electric Motor Control
Solid Waste Engineering
EBK ELECTRICAL WIRING RESIDENTIAL
International Edition---engineering Mechanics: Statics, 4th Edition
Fundamentals of Chemical Engineering Thermodynamics (MindTap Course List)
Steel Design (Activate Learning with these NEW titles from Engineering!)
Automotive Technology
Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)
Network+ Guide to Networks (MindTap Course List)