Question

During 2013, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts:
2011 understated by ........ $120,000
2012 overstated by ........ 150,000
WMC uses a periodic inventory system and the FIFO cost method.

Required:
1. Determine the effect of these errors on retained earnings at January 1, 2013, before any adjustments. Explain your answer. (Ignore income taxes.)
2. Prepare a journal entry to correct the errors.
3. What other step(s) would be taken in connection with the correction of the errors?



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  • CreatedDecember 23, 2013
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