As the accountant for Synergy Solutions, you are in the process of preparing the income statement for
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Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $156,000
Beginning inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,000
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000
Ending inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
1. Prepare a partial income statement through gross margin under each of the following three assumptions:
a. The sale is recorded in the 2012 accounting record; the inventory is included in the ending physical inventory count.
b. The sale is recorded in 2012; the inventory is not included in Ending inventory.
c. The sale is not recorded in the 2012 accounting records; the merchandise is not included in the Ending inventory count.
2. Under the given circumstances, which of the three assumptions is correct?
3. Which assumption overstates gross margin (and therefore net income)?
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain
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