CSC Corp is an online shoe retailer. CSC purchases shoes from premium brands and then sells shoes to the end user via various internet outlets. CSC's inventory accountant is out on leave and in her absence the following inventory accounting errors were made: CSC purchased $12,600 of shoes from a retailer with a firm repurchase agreement in place. The repurchase agreement was recorded correctly before the inventory accountant went on leave, but these shoes were in CSC's warehouse on 12/31/Y1 and were included in the Y1 count. The shoes would be returned in January of Y2, per the repurchase agreement. CSC sold and shipped a large shipment of shoes to a customer on 12/27/Y1 in an after-holiday sale. Sales revenue for these shoes was $36,000 and the total cost of the shoes was $28,500. These shoes were sold with terms FOB destination. CSC recorded a sale on 12/27/Y1 and the shoes arrived at the customer's place of business on 1/2/Y2. Before any error was corrected, Y1 inventory was $218,000 and Y1 COGS was $864,000.

What is the effect of the first error on Y1 assets?

What is the effect of the first error on Y1 liabilities?

What is the effect of the first error on Y1 net income?

What is the effect of the first error on Y1 equity?

What is the effect of the first error on Y2 assets?

What is the effect of the first error on Y2 liabilities?

What is the effect of the first error on Y2 net income?

What is the effect of the first error on Y2 equity?

What is the effect of the second error on Y1 assets?

What is the effect of the second error on Y1 liabilities?

What is the effect of the second error on Y1 net income?

What is the effect of the second error on Y1 equity?

What is the effect of the second error on Y2 assets?

What is the effect of the second error on Y2 liabilities?

What is the effect of the second error on Y2 net income?

What is the effect of the second error on Y2 equity?

What is the correct balance of ending inventory at 12/31/Y1?

What is the correct balance of COGS at 12/31/Y1?

Answer rating: 100% (QA)

Lets break down the effects of each error separately First Error Effect on Y1 Assets The 12600 worth of shoes incorrectly included in Y1 inventory inc... View the full answer