For each of the following inventory errors occurring in 2013, determine the effect of the error on
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For each of the following inventory errors occurring in 2013, determine the effect of the error on 2013’s cost of goods sold, net income, and retained earnings. Assume that the error is not discovered until 2014 and that a periodic inventory system is used. Ignore incometaxes.
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U-understated Ooverstated NE no effect Cost of Goods Sold Net Income Retained Earnings 1. Overstatement of ending inventory 2. Overstatement of purchases 3. Understatement of beginning inventory 4. Freight-in charges are understated 5. Understatement of ending inventory 6. Understatement of purchases 7. Overstatement of beginning inventory 8. Understatement of purchases plus understatement of ending inventory by the same amount
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U understated O overstated NE no effect 1 Overstatement 2 Overstatement of ending inventory ...View the full answer
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Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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