Berkshire Inc. uses a periodic inventory system. At the end of 2020, it missed counting some...
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Berkshire Inc. uses a periodic inventory system. At the end of 2020, it missed counting some inventory items, resulting in an inventory understatement by $620,000. Assume that Berkshire has a 30% income tax rate and that this was the only error it made. If undetected, what is the effect of this error on Berkshire's December 31, 2020 balance sheet? Multiple Choice None of these answer choices are correct. Assets understated by $620,000 and shareholders' equity understated by $620,000. Assets understated by $620,000, liabilities understated by $186,000 and shareholders' equity understated by $434,000. Assets understated by $434,000 and shareholders' equity understated by $434,000. Berkshire Inc. uses a periodic inventory system. At the end of 2020, it missed counting some inventory items, resulting in an inventory understatement by $620,000. Assume that Berkshire has a 30% income tax rate and that this was the only error it made. If undetected, what is the effect of this error on Berkshire's December 31, 2020 balance sheet? Multiple Choice None of these answer choices are correct. Assets understated by $620,000 and shareholders' equity understated by $620,000. Assets understated by $620,000, liabilities understated by $186,000 and shareholders' equity understated by $434,000. Assets understated by $434,000 and shareholders' equity understated by $434,000.
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Related Book For
Intermediate Accounting
ISBN: 978-1259548185
8th edition
Authors: David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
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