Horngren's Accounting, The Financial Chapters (12th Edition)
12th Edition
ISBN: 9780134486789
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 6, Problem E6.24E
Correcting an inventory error-two years
Learning Objective 5
- 2019, NI $36,500
Nature Foods Grocery reported the following comparative income statements for the years ended June 30, 2019 and 2018:
NATURE FOODS GROCERY |
Income Statements
Years 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.
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(Learning Objectives 4, 5: Compute gross profit; estimate inventory using the grossprofit method) Cleveland Company, a camera store, lost some inventory in a fire on October15. To file an insurance claim, the company must estimate its October 15 inventory using thegross profit method. For the past two years, Cleveland Company’s gross profit has averaged41% of net sales. Its inventory records reveal the following data:Inventory, October 1................ $ 57,700Transactions October 1–15:Purchases ................................. 490,800Purchase discounts................... 17,000Purchase returns....................... 70,900Sales......................................... 660,000Requirements1. Estimate the cost of the lost inventory using the gross profit method.2. Prepare the income statement for October 1 to October 15 for this product through grossprofit. Show the detailed computations of cost of goods sold in a separate schedule.
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Chapter 6 Solutions
Horngren's Accounting, The Financial Chapters (12th Edition)
Ch. 6 - Which principle or concept states that business...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 - Which of the following is most closely linked to...Ch. 6 - At December 31, 2018, Stevenson Company overstated...Ch. 6 - Suppose Maestro’s had cost of goods sold during...Ch. 6 - Suppose used the LIFO inventory costing method and...Ch. 6 - Prob. 1RQ
Ch. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Discuss some measures that should be taken to...Ch. 6 - Under a perpetual inventory system, what are the...Ch. 6 - When using a perpetual inventory system and the...Ch. 6 - During periods of rising costs, which inventory...Ch. 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 - How is inventory turnover calculated, and what it...Ch. 6 - How is days’ sales inventory calculated, and what...Ch. 6 - When using the periodic inventory system, which...Ch. 6 - When using periodic inventory system and...Ch. 6 - Determining inventory accounting principles...Ch. 6 - Determining inventory costing methods Learning...Ch. 6 - Preparing a perpetual Inventory record and journal...Ch. 6 - Preparing a perpetual inventor, record and journal...Ch. 6 - Preparing a perpetual inventor record and journal...Ch. 6 - Preparing a perpetual inventory record and journal...Ch. 6 - Comparing Cost of Goods Sold under FIFO, LIFO, and...Ch. 6 - Applying the lower-of-cost-or-market rule Learning...Ch. 6 - Determining the effect of an inventory error...Ch. 6 - Computing the rate of inventory turnover and days’...Ch. 6 - Computing periodic inventory amounts—FIFO Learning...Ch. 6 - Computing periodic inventory amounts—LIFO Learning...Ch. 6 - Computing periodic inventory...Ch. 6 - Using accounting vocabulary Learning Objective 1,...Ch. 6 - Comparing inventory methods Learning Objective 2...Ch. 6 - Measuring and journalizing merchandise inventory...Ch. 6 - Measuring and journalizing merchandise inventory...Ch. 6 - Measuring ending inventory and cost of goods sold...Ch. 6 - Comparing amounts for cost of goods sold, ending...Ch. 6 - Comparing cost of goods sold and gross...Ch. 6 - Applying the lower-of-cost-or-market rule to...Ch. 6 - Applying the lower-of-cost-or-market rule to...Ch. 6 - Measuring the effect of an inventory error...Ch. 6 - Correcting an inventory error-two years Learning...Ch. 6 - Computing inventory turnover and days’ sales in...Ch. 6 - Comparing ending merchandise inventory, cost of...Ch. 6 - Computing periodic inventory amounts Learning...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting for inventory using the perpetual...Ch. 6 - Accounting principles for inventory and applying...Ch. 6 - Prob. P6.31APGACh. 6 - Prob. P6A.32APGACh. 6 - Prob. P6.33BPGBCh. 6 - Prob. P6.34BPGBCh. 6 - Accounting principles for inventory and applying...Ch. 6 - Prob. P6.36BPGBCh. 6 - Prob. P6A.37BPGBCh. 6 - Prob. P6.38CTCh. 6 - Prob. P6.39CPCh. 6 - Prob. P6.40PSCh. 6 - Prob. 1CPCh. 6 - Prob. 2CPCh. 6 - Prob. 3CPCh. 6 - Prob. 4CPCh. 6 - Prob. 5CPCh. 6 - Prob. 6CPCh. 6 - Prob. 7CPCh. 6 - Prob. 8CPCh. 6 - Prob. 9CPCh. 6 - Prob. 10CPCh. 6 - Prob. 11CPCh. 6 - Prob. 6.1TIATCCh. 6 - Prob. 6.1DCCh. 6 - Prob. 6.1FSC
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