Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical...

 

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Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is understated by $56,000 and Year 2 ending inventory is overstated by $20.000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Required: 1. For each key financial statement figure-(a), (b), (c) and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? Cost of goods sold: Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Complete this question by entering your answers in the tabs below. Net income: Reported amount Adjustment for 12/31/Year 1 Adjustment for 12/31/Year 2 error Corrected amount Total current assets Year 1 $ 615,000 230,000 1,255,000 1,387,000 Required 1 Required 2 For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.) Year 1 Year 3 error Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Equity Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount $ S Year 2 $957,000 285,000 1,365,000 1,550,000 $ S 4 Requie 0$ Year 3 $ 780,00 241,00 1,200,000 1,242,000 0 $ 0 $ Year 2 05 0 $ Required 2 Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is understated by $56,000 and Year 2 ending inventory is overstated by $20.000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Required: 1. For each key financial statement figure-(a), (b), (c) and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? Cost of goods sold: Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Complete this question by entering your answers in the tabs below. Net income: Reported amount Adjustment for 12/31/Year 1 Adjustment for 12/31/Year 2 error Corrected amount Total current assets Year 1 $ 615,000 230,000 1,255,000 1,387,000 Required 1 Required 2 For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.) Year 1 Year 3 error Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Equity Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount $ S Year 2 $957,000 285,000 1,365,000 1,550,000 $ S 4 Requie 0$ Year 3 $ 780,00 241,00 1,200,000 1,242,000 0 $ 0 $ Year 2 05 0 $ Required 2

Answer rating: 100% (QA)

Goods Sold Year1 Year2 Year3 Reported Amount 61500000 95700000 78000000 Adjustments f... View the full answer