![Horngren's Accounting: The Managerial Chapters (12th Edition) (loose Leaf Version)](https://www.bartleby.com/isbn_cover_images/9780134486826/9780134486826_largeCoverImage.gif)
Measuring the effect of an inventory error
Learning Objective 5
b. Correct GP $19 000
Hot Bread Bakery reported net sales revenue of $44,000 and cost of goods sold of $33,000. Compute Hot Breads correct gross profit if the company made either of the following independent accounting errors. Show your work.
a.Ending merchandise inventory is overstated by $8,000
b. Ending merchandise inventory is understated by $8,000
![Check Mark](/static/check-mark.png)
Learn your wayIncludes step-by-step video
![Blurred answer](/static/blurred-answer.jpg)
Chapter 6 Solutions
Horngren's Accounting: The Managerial Chapters (12th Edition) (loose Leaf Version)
Additional Business Textbook Solutions
Financial Accounting (11th Edition)
Principles of Accounting Volume 2
Financial Accounting, Student Value Edition (4th Edition)
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Cost Accounting (15th Edition)
- 7:28S W □ e6-20 Learning Objectives 2, 3 1. COGS $2,140 ⠀⠀⠀ Assume that AB Tire Store completed the following perpetual inventory transactions for a line of tires: May 1 Beginning merchandise inventory 11 Purchase 23 Sale 26 Purchase 29 Sale QAA C 16 tires @ $65 each 363/ 1480 10 tires @ $78 each 12 tires @ $88 each 14 tires @ $ 80 each Requirements 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method. 18 tires @ $ 88 each 5G 70% Ę 2. Compute cost of goods sold and gross profit using the LIFO inventory costing method. GO ||| 0 < : ×arrow_forwardPROBLEM 2: FOR CLASSROOM DISCUSSION Gross profit rate 1. The following data relate to the records of Poweli Corp. for the month of September: Sales . P160,000 Beginning inventory Purchases .. P 20,000 180,000 P200,000 Goods available for sale Requirements: Using these data, estimate the cost of ending inventory for each situation below: a) b) Markup is 50 percent on cost. Markup is 60 percent on sales. Markup is 25 percent on cost. Markup is 40 percent on sales. c) d)arrow_forwardProblem 10 Indicate the effects of the following errors on cost of goods sold and net income. 1. Beginning inventory is understated by $10,000. 2. Ending inventory is overstated by $25,000. 3. Beginning inventory is overstated by $30,000 and ending inventory is understated by $10,000. nsidov 4. Ending inventory is understated by $5,000 and beginning inventory is understated by $5,000.arrow_forward
- Tube C CengageNOWV2 | Online teaching and learning resourc... Using the following information for a periodic inventory system, what is the amount of net income (loss)? Purchases Inventory, September 1 Administrative expense Rent revenue Sales 1,146 Selling expense $825 Inventory, September 30 11,074 58,402 $28,452 7,276 697 Interest expense Oa. $32,565 Ob. $807 Oc. $24,654 X Od. $27,288 Dashboard 807arrow_forward7:30 S&WYDO □ E6A-27 Computing periodic inventory amounts Learning Objective 7 Appendix 6A ::: e6a-27 Consider the data of the following companies which use the periodic inventory system: Company Net Large Small Medium Petite Sales Revenue $ 105,000 Requirements. (b) 96,000 80,000 Beginning Net Cost Merchandise of Inventory $ 23,000 $ 59,000 27,000 (d) Purchases 8,000 94,000 58,000 366/ 1480 QAA (f) Ending Merchandise of Inventory Cost Goods Sold 5G l 69% $ 22,000 $ (a) Gross Profit $ 45,000 (c) 99,000 40,000 24,000 68,000 (e) 6,500 (g) 44,000 IG b III O < ×arrow_forwardAssume that in Year 1, the ending merchandise inventory is overstated by $40,000. If this is the only error in Years 1 and 2, fill in the items below, indicating which items will be understated, overstated, or correctly stated, for Years 1 and 2. Year 1 Year 2 Ending merchandise inventory __________ __________ Beginning merchandise inventory ___________ _________ Cost of goods sold __________ __________ Gross profit __________ __________ Net income __________ _________arrow_forward
- LESSON 10: THE PERPETUAL SYSTEM ACTIVITY L. Give the necessary journal entries under the periodic inventory system and the perpetual inventory system. Bum Supplies purchases P 150,000 worth of merchandise from Clumsy Traders on account, terms 1/10, n/30 on August 15. P 20,000 worth of damage goods were returned to Clumsy Traders the following day. Full payment was made on August 25. Periodic Inventory Perpetual Inventory Aug 15 16 25arrow_forwardUsing Excel to Cost Inventory Student Work Area PROBLEM Required: Provide input into cells shaded in yellow in this template.Use only mathematical formulas with cell references to compute the unit cost and the cost of ending inventory. In its first month of operations, McLanie Company made three purchases. Information concerning these purchases and units on hand are: Units Cost per Unit Compute the cost of the ending inventory under the average-cost method in a periodic inventory system. 300 $ 6.00 400 8.00 500 9.00 Weighted-average unit cost Units on hand at period end 200 Round unit cost to 3 decimals using the ROUND function Purchases of merchandise were made in the sequence listed above. Cost of ending…arrow_forwardOBJECTIVE 1 - During the current year, merchandise is sold for $795,000. The cost of the merchandise sold is $477,000. a) What is the amount of the gross profit? b) Compute the gross profit percentage (gross profit divided by sales). c) Will the income statement necessarily report a net income? Explain. OBJECTIVE 2 - 1 - The following data were extracted from the accounting records of Wedgeforth Company for the year ended November 30, 2010: Merchandise inventory, December 1, 2009 P 210,000 Merchandise inventory, November 30, 2010 185,000 Purchases 1,400,000 Purchases returns and allowances 20,000 Purchases discounts 18,500 Sales 2,250,000 Freight in 14,100 a) Prepare the cost of merchandise sold section of the income statement for the year ended November 30, 2010, using the periodic inventory system. b) Determine the gross profit to be reported on the income statement for the year ended November 30, 2010.arrow_forward
- Chapter 5 Quiz Using the following information for a periodic inventory system, what is the amount of net income? Purchases $32,000 Selling expense $960 2. Inventory, September 1 5,700 Inventory, September 30 6,370 3. Administrative expense 910 Sales 63,000 Rent revenue 1,200 Interest expense 1,040 4. Oa. $28,310 5. Ob. $29,510 Oc. $29,350 6. Od. $29,960 7. 8. 9. 10. 11. 12. 13. Varrow_forwardInventory Errors Assume that in year 1, the ending merchandise inventory is overstated by $50,000. If this is the only error in years 1 and 2, indicate which items will be understated, overstated, or correctly stated for years 1 and 2. Year 1 Year 2 Ending merchandise inventory Beginning merchandise inventory Cost of goods sold Gross profit Net income Ending owner's capitalarrow_forwardtests.mettl.com/test-window/f55ac827#/testWindow/0/12/1 EY Accounting Assessment Total 00:55:09 Finish Test Section 1 of 1 Section #1 v 5 7 8. 10 11 12 13 14 15 13 of 45 All 2 43 Question # 13 G Revisit Choose the best option The following information is available for an entity for the quarter ended March 31, of the current year Merchandise inventory, as of January 1 of the current year 30,000, Sales 200,000, Purchases 190,000. The gross profit margin is normally 20% of sales What is the estimated cost of the merchandise inventory at March 31, of the current year? O 20,000 O 40,000 60,000 180,000 Next Queslion +91-82878-03040 Zaineh Support +1-650-924-9221 413 PM metil 1/16/2021arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)