During 20Y5, the accountant discovered that the physical inventory at the end of 20Y4 had been understated by $42,750. Instead of correcting the error, however, the accountant assumed that the error would balance out (correct itself) in 20Y5. Are there any flaws in the accountant’s assumption? Explain.

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A: Goods Available for Sale=Beginning Inventory+PurchasesCost of Goods Sold=Beginning…

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A: The inventory needs to be recorded correctly as incorrect accounting of inventory would impact the…

Q: The following information is presented for Bramble Corporation. The net income figures were computed…

A: Understatement or overstatement of inventory directly impacts the amount of reported net income for…

Q: Farley Bains, an auditor with Nolls CPAs, is performing a review of Teal Mountain Inc.’s Inventory…

A: Inventory is a current asset to the company. It consist of goods available for sale, goods in…

Q: At the end of the last fiscal period (December 2016), employees for Trans-Canada Distributors…

A: Following is the answer to the given question

Q: Wakowski Company's ending inventory was actually $86,000 but was adjusted and recorded at year end…

A: It is important that we do not over/understate assets in the Statement of Financial Position. We…

Q: As a new account assistant, Miss Fizah has been assigned to calculate the amount that should appear…

A: Here asked for multi sub part question we will solve first three sub part question for you.  If you…

Q: You have been hired as the new controller for the Ralston Company. Shortly after joining the company…

A: Inventory: It refers to the items held by an organization which were in various forms like raw…

Q: Farley Bains, an auditor with Nolls CPAs, is performing a review of Splish Brothers Inc.’s Inventory…

A: Prepare a schedule for determining correct inventory as shown below:

Q: Ann M. Martin Company makes the following errors during the current year. (Evaluate each case…

A: Introduction Errors in Inventory will affect Cost of Goods Sold, Gross Profit as well as Net Income.…

Q: Scruffy Brothers Supply does a physical inventory count when the business is closed at the end of…

A: Adjusting entries are made when the accounts are closed and after closing the account, any…

Q: Farley Bains, an auditor with Nolls CPAs, is performing a review of Waterway Company’s Inventory…

A: Prepare a schedule to determine the correct inventory amount as shown below:

Q: What accounts would be debited and credited to record the adjustment for the inventory shrinkage at…

A: Perpetual inventory system:   In this system, the record of inventory is maintained in a…

Q: Rachel Warren, an auditor with Laplante CPAs, is performing a review of Skysong, Inc.’s inventory…

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Q: If a group of inventory items costing $15,000 had been omitted from the year-end inventory count,…

A: The errors in inventory causes overstatement or understatement of inventory. When the ending…

Q: In March 2018, Blue Devil Company realized that they had overstated their December 2016 ending…

A: Inventory: Inventory are raw materials, work-in-process, finished goods and other stocks. The stock…

Q: Ann M. Martin Company makes the following errors during the current year.    1.   Overstatement of…

A: Assets, liabilities and stockholders' equity are included in the balance sheet of the company.

Q: Rachel Warren, an auditor with Laplante CPAS, is performing a review of Pina Colada Corp.'s…

A: No. Ending Inventory - As reported Reason 1. Included in the company’s count were goods with…

Q: Which of the following statements on inventory valuation errors is false? a. Over a two-year…

A: Ending inventory as regarding as credit item and will effect net income and balance sheet values.…

Q: According to its records, the inventory balance at year-end was $37,000. However, the following…

A: Inventory is part of current assets of a company. Reporting inventory at inflated values can lead to…

Q: The accountant for Suzanne Company made the following errors related to inventory in 2020: 1. The…

A: Formula: Cost of goods sold = Beginning inventory + purchases - Closing stock. Closing stock is to…

Q: On December 31, 2010, Paperville computed an ending inventory valuation of $250,000. The accounts…

A: Closing / Ending Inventory Valuation = $250,000 (Adjusted and Clsoed)   Calculation of Ending…

Q: During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly…

A: When ending Inventory is Over stated then Gross profit and net profit both will increased and…

Q: The following errors were discovered in the preparation of the financial statements of Uni-Focus…

A: The correction entries are passed to correct the information in the books.

Q: In 2016, the internal auditors of Development Technologies, Inc. discovered that a $4 million…

A: Inventory errors: It refers to the errors that result in overstatement or understatement of ending…

Q: You have been hired as the new controller for the Ralston Company. Shortly after joining the company…

A: Journal entry is the process of documenting commercial transactions for the first time in the books…

Q: During the taking of the physical inventory, the company inadvertently counted its inventory as…

A: Any increase in ending inventory decreases the cost of goods sold and profit will be increased. but…

Q: Marigold Inc. took a physical inventory at the end of the year and determined that $777000 of goods…

A: FOB Shipping point goods are shipped, so this will be included in the inventory. Goods on…

Q: 2. Gabriela Company’s auditor discovered that the company inadvertently overstated ending Inventory…

A: Inventory means the goods in which the business deals. Inventory should be valued correctly  as it…

Q: Ebbers Corporation overstated its ending inventory balance by $15,000 in the current year. What…

A:

Q: During the taking of its physical inventory on December 31, 2014, Barry's Bike Shop incorrectly…

A: Introduction: Overstated: Overstated means recording the count more than the actual count.…

Q: The inventory at the end of the year was understatedby $14,750. (a) Did the error cause an…

A: (a)

Q: Bramble Decor did not have a good year, and top management is under pressure to boost reported…

A: Inventory is goods available for sale and raw materials which is used to produce goods available for…

Q: The following is an independent error made by a company that uses the periodic inventory system:…

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: Farley Bains, an auditor with Nolls CPAS, is performing a review of Teal Mountain Inc.'s Inventory…

A: Inventory: Inventory refers to the stock of goods purchased, utilized and maintained by the company…

Q: The condensed statement of income of LUNA, Inc. for the year ended December 31, 2020 is presented…

A: Adjusting entries journal entries that are passed at the conclusion of a financial year in order to…

Q: Office Outfitters Inc. which uses a perpetual inventory system, experienced an inventory shrinkage…

A: Introduction  Inventory shrinkage is the loss in inventory due to various reasons such as theft,…

Q: Assume that Audio Outfitter Inc. in Discussion Question 9 experienced an abnormal inventory…

A: Adjustment entry for abnormal inventory shrinkage:

Q: If Soda Popinski's Company's ending inventory was actually $86,000 but was adjusted at year end to a…

A: Cost of good sold = Opening inventory + Purchases + Direct expenses - Closing inventory.   So,…

Q: If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a…

A: Solution: Small error in inventory valuation would cause a complete error in a financial statement.…

Q: During the 2022 ending inventory count, Sungjae Im miscounts ending inventory and determines that he…

A: The cost of goods sold is calculated as difference between cost of goods available for sale and…

Q: What should be reported as the correct 2029 pretax income?

A: Reporting Correct Income is very much necessary and its Possible that some adjustments must be made…

Q: In January 2020, Susquehanna Inc. requested and secured permission from the commissioner of the…

A: Requirement a:   Inventory:   Inventory refers to the entire stock of goods purchased, goods…

Q: Clover Company, a corporation using a periodic inventory system, made undiscovered errors in taking…

A: Basic Accounting Concept Note for this question: Overstatement of Ending or Closing Inventory leads…

Q: While  examining the December 31, 2010 financial statements of Dawn Company, the following errors…

A: The Question requires us to calculate corrected Net Income for the year ended December 31,2010.

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.