HORNGREN'S FIN.+MGRL..:MANAG.CHP.-MYLAB
7th Edition
ISBN: 9780136503613
Author: MILLER-NOBLES
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Scenario 1:Rocky Inc hired a new intern from CSU to help with year-end inventory. The intern
computed the inventory counts at the end of 2020 and 2021. However, the intern's manager,
a UNC grad, noticed that the ending inventory did not include inventory on consignment to a
retail customer of $3,000 at the end of year 2020 and $6,000 at the end of year 2021. What
was the effect of the error (if any] on 2021's statements (amount and whether it was under- (
too low) or over-stated (too high)? If there is no effect, put OK
PROBLEM:
Sharp Company received P 80,000 of inventory items on the last day of its fiscal year, May 31, 2022. The company employees a periodic inventory system. During your audit, you discovered the following:
Items Alpha were included in inventory at May 31, 2022, but the purchase was not recorded until June 3, 2022, P 100,000.
Items Bravo were excluded from the May 31, 2022 inventory, but the purchase was recorded on May 31, 2022, P 60,000.
Items Charlie were excluded from the May 31, 2022 inventory, the purchase was not recorded until June 3, 2022, P 50,000.
QUESTION:
What is the net effect on net income of the errors?
1. Your audit of DEC Company's inventory and related records revealed the following information:
Merchandise inventory, January 1, 2019 450,000
Purchases for the year 2019
3,150,000
Sales for the year 2019
4,200,000
You conducted a physical inventory on December 31, 2019 and deterrnined 500,000 was in the company's warehouse. The company's president suspects some new employees may have pilfered a portion of the merchandise inventory.
REQUIRED:
Determine the estimated cost of the missing inventory, assuming DEC Company 's gross profit remained constant at:
- 40% of sales
- 40% of cost of sales
2. You took a physical inventory for your sole proprietorship at the close of business on July 31, 2019.
The inventory totaled 205,000. You were verifying the accuracy of the inventory records at June 30, 2019, therefore you must estimate an inventory amount on that date. You find that during the period July 1 through July 31, 2019, sales were 705,000; sales returns, 18,000; gross purchases…
Chapter 6 Solutions
HORNGREN'S FIN.+MGRL..:MANAG.CHP.-MYLAB
Ch. 6 - Which principle or concept states that businesses...Ch. 6 - Which inventory costing method assigns to ending...Ch. 6 - Assume Nile.com began April with 14 units of...Ch. 6 - Suppose Nile.com used the weighted-average...Ch. 6 - Which inventory costing method results in the...Ch. 6 - Prob. 6QCCh. 6 - At December 31, 2016, Stevenson Company overstated...Ch. 6 - Suppose Maestros had cost of goods sold during the...Ch. 6 - Suppose Nile.com used the LIFO inventory costing...Ch. 6 - Prob. 1RQ
Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - What is the goal of conservatism?Ch. 6 - Prob. 5RQCh. 6 - Under a perpetual inventory system, what are the...Ch. 6 - Prob. 7RQCh. 6 - Prob. 8RQCh. 6 - What does the lower-of-cost-or-market (LCM) rule...Ch. 6 - What account is debited when recording the...Ch. 6 - What is the effect on cost of goods sold, gross...Ch. 6 - When does an inventory error cancel out, and why?Ch. 6 - Prob. 13RQCh. 6 - Prob. 14RQCh. 6 - Prob. 15ARQCh. 6 - Prob. 16ARQCh. 6 - Determining inventory accounting principles Ward...Ch. 6 - Prob. 6.2SECh. 6 - Prob. 6.3SECh. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Use the following information to answer Short...Ch. 6 - Comparing Cost of Goods Sold under FIFO, UFO, and...Ch. 6 - Prob. 6.8SECh. 6 - Prob. 6.9SECh. 6 - Prob. 6.10SECh. 6 - Prob. 6.11SECh. 6 - Prob. 6.12SECh. 6 - Prob. 6.13SECh. 6 - Using accounting vocabulary Match the accounting...Ch. 6 - Prob. 6.15ECh. 6 - Prob. 6.16ECh. 6 - Use the following information to answer Exercises...Ch. 6 - Prob. 6.19ECh. 6 - Prob. 6.20ECh. 6 - Prob. 6.21ECh. 6 - Prob. 6.22ECh. 6 - Prob. 6.23ECh. 6 - Prob. 6.24ECh. 6 - Prob. 6.25ECh. 6 - Prob. 6.26ECh. 6 - Prob. 6.27ECh. 6 - Prob. 6.28APCh. 6 - Prob. 6.29APCh. 6 - Prob. 6.30APCh. 6 - Prob. 6.31APCh. 6 - Prob. 6.32APCh. 6 - Prob. 6.33BPCh. 6 - Prob. 6.34BPCh. 6 - Prob. 6.35BPCh. 6 - Prob. 6.36BPCh. 6 - Prob. 6.37BPCh. 6 - Prob. 6.38CPCh. 6 - Prob. 6.39PSCh. 6 - Prob. 6.1COPCh. 6 - Prob. 6.1CTDC
Knowledge Booster
Similar questions
- For all exercises, assume the perpetual inventory system is used unless stated otherwise. Correcting an inventory error—two years Nature Foods Grocery.1 reported the following comparative income statements for the year ended June 30, 2019 and 2018: During 2019, Nature Foods Grocery discovered that ending 2018 merchandise inventory was overstated by $5,500. Requirements Prepare corrected income statements for the two years. State whether each year’s net income—before your corrections—is understated or overstated, and indicate the amount of the understatement or overstatement.arrow_forwardProblem 1. How much is the adjusted inventory? * Makati Company is preparing its 2022 financial statements. Prior to any adjustments, inventory is valued at P1,605,000. During your audit, you found the following information relating to certain inventory transactions from your cutoff test. a. b. C. e. f. Goods valued at P110,000 are on consignment with a customer. These goods were not included in the ending inventory figure. d. A P35,000 shipment of goods to a customer on December 31, terms FOB destination was not included in the year-end inventory. The goods cost P26,000 and were delivered to the customer on January 8, 2023. The sale was properly recorded in 2023. g. Goods costing P87,000 were received from a vendor on January 5, 2023. The related invoice was received and recorded on January 12, 2023. The goods were shipped on December 31, 2022, terms FOB shipping point. Goods costing P85,000, sold for P102,000, were shipped on December 31, 2022, and were delivered to the customer on…arrow_forwardInventory Valuation You are engaged in an audit of Roche Mfg. Company for the year ended December 31, 2019. To reduce the workload at year-end, Roche took its annual physical inventory under your observation on November 30, 2019. Roches inventory account, which includes raw materials and work in process, is on a perpetual basis, and it uses the first-in, first-out method of pricing. It has no finished goods inventory. The companys physical inventory revealed that the book inventory of 60,570 was understated by 3,000. To avoid distorting the interim financial statements, Roche decided not to adjust the book inventory until year-end except for obsolete inventory items. Your audit revealed this information about the November 30 inventory: Pricing tests showed that the physical inventory was overpriced by 2,200. Footing and extension errors resulted in a 150 understatement of the physical inventory. Direct labor included in the physical inventory amounted to 10,000. Overhead was included at the rate of 200% of direct labor. You determined that the amount of direct labor was correct and the overhead rate was proper. The physical inventory included obsolete materials recorded at 250. During December, these materials were removed from the inventory account by a charge to cost of sales. Your audit also disclosed the following information about the December 31, 2019, inventory. Total debits to certain accounts during December are: The cost of sales of 68,600 included direct labor of 13,800. Normal scrap loss on established product lines is negligible. However, a special order started and completed during December had excessive scrap loss of 800 which was charged to Manufacturing Overhead Expense. Required: 1. Compute the correct amount of the physical inventory at November 30, 2019. 2. Without prejudice to your solution to Requirement 1, assume that the correct amount of the inventory at November 30, 2019, was 57,700. Compute the amount of the inventory at December 31,2019.arrow_forward
- Webster Company adopted do liar-value LIFO on January 1, 2019. Webster produces three products: X, Y, and Z. Websters beginning inventory consisted of the following: During 2019, Webster had the following purchases and sales: Required: 1. Compute the LIFO cost of the ending inventory assuming Webster uses a single inventory pool. Round cost index to 4 decimal places. 2. Compute the LIFO cost of the ending inventory assuming Webster uses three inventory pools. Round cost indexes to 4 decimal places.arrow_forwardThe moving average inventory cost flow assumption is applicable to which of the following inventory systems? Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019.arrow_forwardAccounting Compute for the net sales that would be reported in LIVA company's Income Statement. You are to be assigned to prepare the financial statement of LIVA Company for the year 2021. The following data were made available for you: Ending Inventory at Cost - 739, 160 Goods Available for Sale at retail - 3, 930, 000 Sales Discount - 16, 000 Net markdowns - 48, 500 Net markups - 30, 000 Beginning inventory at retail - 1, 450, 000 Purchases at retail - 2, 422, 000 The company adopts the average cost approach to estimate the value of its inventory and the cost ratio is computed at 68%.arrow_forward
- Items to Be Included in Inventory As the auditor of Hayes Company forthe year ended December 31, 2019, you found the following transactionsoccurred near its closing date: 1. Merchandise received on January 8, 2020, and costing $800 wasrecorded as inventory on January 8, 2020. An invoice on handshowed the shipment was made FOB shipping point on December31, 2019. Because the merchandise was not on hand at December31, 2019, it was not included in the 2019 inventory balance. 2. A product costing $600 was in Hayes's shipping room when thephysical inventory was taken. It was not included in the inventorybecause it was marked "Hold for customer's shipping instructions." Investigation revealed that the customer's order was datedDecember 18, 2019 but that the case was shipped and the customer billed on January 10, 2020.3. A machine, made to order for a customer, was finished onDecember 31, 2019, The customer had inspected it and wassatisfied with it. The customer was billed in full for $2,000…arrow_forwardI What is the amount of gross profit for the eleven months 2 What is the amount of sales for the month of June? a What is the cost of goods sold for the month of June ? at an interim date, May 31, 2020, instead of at year end. ended June 30, 2020, the CPA observed the physical inventory The following information was obtained from the general „Problem 13-14 (AICPA Adapted) ended May 31, 2020? year In conducting an audit of Ultimate Company for the a 1,680,000 b. 1,725,000 C. 1,735,000 d. 1,670,000 ledger. Inventory, July 1, 2019 Physical inventory, May 31, 2020 Sales for 11 months ended May 31, 2020 Sales for year ended June 30, 2020 Purchases for 11 months ended May 31, 2020 before audit adjustments Purchases for year ended June 30, 2020 before audit adjustments 875,000 950,000 8,400,000 9,600,000 в. 1,100,000 b. 1,200,000 c. 1,300,000 d. 1,400,000 er 14 6,750,000 8,000,000 1. Shipments received in May and included in the physical inventory but recorded as June purchases a. 960,000 b.…arrow_forwardTopic: SINGLE-ENTRY BOOKKEEPING SANAOL Company suspects that there is missing inventory in its warehouse at December 31, 2021. All sales and purchases were made on account. Also, the gross profit rate based on net sales is consistent every year. To aid in your investigation, you obtained the following: How much is the missing inventory during the year?arrow_forward
- For all problems, assume the perpetual inventory system is used unless stated otherwise. P6-28A Accounting for inventory using the perpetual inventory system- FIFO, LIFO, and weighted-average Fit Gym began January with merchandise inventory of 78 crates of vitamins that cost a total of $4,290. During the month, Fit Gym purchased and sold merchandise on Merchandise Inventory 363 Learning Objectives 2, 3 2. Ending Merch. Inv., $990 account as follows: Jan. 5 Purchase 156 crates @ $ 64 each 13 Sale 180 crates @$ 100 each 18 Purchase 114 crates @ $ 75 each 26 Sale 150 crates @ $ 116 each Requirements 1 Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit. 2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit. 3. Prepare a perpetual inventory record,…arrow_forwardYou are assigned to prepare the financial statements of LIVA Company for the year 2021. The following data were made available for you: Ending Inventory at Cost 739,160 Goods Available for Sale at retail 3,930,000 Sales Discount 16,000 48,500 Net markdowns Net markups 30,000 Beginning inventory at retail 1,450,000 2,422,000 Purchases at retail The company adopts the average cost approach to estimate the value of its inventory and the cost ratio is computed at 68%.arrow_forwardItems to Be Included in Inventory As the auditor of Hayes Company for the year ended December 31, 2019, you found the following transactions occurred near its closing date:1. Merchandise received on January 8, 2020, and costing $800 was recorded as inventory on January 8, 2020. An invoice on hand showed the shipment was made FOB shipping point on December 31, 2019. Because the merchandise was not on hand at December 31, 2019, it was not included in the 2019 inventory balance.2. A product costing $600 was in Hayes’s shipping room when the physicalinventory was taken. It was not included in the inventory because it was marked “Hold for customer’s shipping instructions.” Investigation revealed that the customer’s order was dated December 18, 2019 but that the case was shipped and the customer billed on January 10, 2020.3. A machine, made to order for a customer, was finished on December 31, 2019,The customer had inspected it and was satisfied with it. The customer was billed infull for…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning