Assume that the client made the following actual credit sales and received cash receipts as follows...

  

  

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Assume that the client made the following actual credit sales and received cash receipts as follows after 12/29/18: Date Sales Cost of Goods Sold Cash Receipts (Receivables Collected) 12/30/2018 $5,000 $ 12/31/2018 $3,000 $ 1/1/2019 $9,000 $ 1/2/2019 $7,000 $ 2,500 $ 1,500 $ Sales $55,000 Cost of Goods Sold $35,000 Inventory $25,000 4,500 $ 3,500 $ Assume the following balances at 12/29/18: O Cash $50,000 O Accounts Receivable $45,000 O O O 4,000 3,500 4,500 4,000 Determine the overstatements and understatements that would result from the following situation. Assume that each situation is independent of one another. In the case of a perpetual inventory, assume that the year-end inventory count did not identify and correct the misstatements. All sales are on account. ABC Company keeps the sales journal open after 12/31/2018 for two additional days in 2019. Sales transactions for 1/1/19 & 1/2/19 were recorded in December 2018 records. The company uses perpetual inventory system. What effect would this have on the 2018 financial statements? ● Complete the schedule below: ACCOUNT Accounts Receivable Inventory Sales Cost of Goods Sold Gross Margin Correct Balance Incorrect Balance Account Overstated, Understated or Correct #1 #3 #5 #7 #9 Amount of Error #2 #4 #6 #8 #10 Assume that the client made the following actual credit sales and received cash receipts as follows after 12/29/18: Date Sales Cost of Goods Sold Cash Receipts (Receivables Collected) 12/30/2018 $5,000 $ 12/31/2018 $3,000 $ 1/1/2019 $9,000 $ 1/2/2019 $7,000 $ 2,500 $ 1,500 $ Sales $55,000 Cost of Goods Sold $35,000 Inventory $25,000 4,500 $ 3,500 $ Assume the following balances at 12/29/18: O Cash $50,000 O Accounts Receivable $45,000 O O O 4,000 3,500 4,500 4,000 Determine the overstatements and understatements that would result from the following situation. Assume that each situation is independent of one another. In the case of a perpetual inventory, assume that the year-end inventory count did not identify and correct the misstatements. All sales are on account. ABC Company keeps the sales journal open after 12/31/2018 for two additional days in 2019. Sales transactions for 1/1/19 & 1/2/19 were recorded in December 2018 records. The company uses perpetual inventory system. What effect would this have on the 2018 financial statements? ● Complete the schedule below: ACCOUNT Accounts Receivable Inventory Sales Cost of Goods Sold Gross Margin Correct Balance Incorrect Balance Account Overstated, Understated or Correct #1 #3 #5 #7 #9 Amount of Error #2 #4 #6 #8 #10

Answer rating: 100% (QA)

ANSWER ACCOUNT CORRECT BALANCE INCORRECT BALANCE ACCOUNT OVERSTATED UNDERS... View the full answer