Question: Exercise 20-19 (Algo) Error correction; inventory error [LO20-6] During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by

Exercise 20-19 (Algo) Error correction; inventory error [LO20-6]

During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:


2019	understated by	$	122,000
2020	overstated by		154,000

WMC uses the periodic inventory system and the FIFO cost method. Required: 1-a. Determine the effect of 2019 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 1-b. Determine the effect of 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the error in 2021. 3. Will WMC account for the error (a) retrospectively or (b) prospectively?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Exercise 9-25 (Algo) Error correction; inventory error [LO9-7] During 2021. WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following...

Exercise 20-19 (Algo) Error correction; inventory error (LO20-6) During 2021. WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the...

Exercise 20-19 (Algo) Error correction; inventory error (LO20-6) During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the...

Exercise 20-19 (Algo) Error correction; inventory error (LO20-6] During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the...

Exercise 20-19 (Algo) Error correction; inventory error (LO20-6) During 2021. WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the...

Exercise 20-19 (Algo) Error correction; inventory error (LO20-6) During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the...

Exercise 20-19 (Algo) Error correction; inventory error [LO20-6] During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the...

Exercise 9-25 (Algo) Error correction; inventory error (LO9-7] During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following...

Exercise 9-25 (Algo) Error correction; inventory error [LO9-7] During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following...

Exerclse 20-19 (Static) Error correction; Inventory error [LO20-6] During 2021, WMC Corporation dlscovered that its ending Inventorles reported on its financlal statements were misstated by the...

Hansco borrowed $9200 paying interest at 11% compounded annually. If the loan is repaid by payments of $2000 made at the end of each year, construct an amortization schedule showing the total paid...

Discuss how technology has made the accountants job easier and, at the same time, more challenging. How does that impact the future number of accounting jobs?

Planning for labor shortages is easy. You just decide how many people you will need and start recruiting.Planning for labor shortages is easy. You just decide how many people you will need and start...

How important is credibility when communicating with your athletes? Credibility is overrated. Credibility is one of the most important elements. Credibility is not an issue with athletes. Credibility...

Can you summarise your strategic intent clearly, simply and briefly?

Where using tools like SWOT and PESTLE, are they adding to the thinking, or just there because someone thinks they should be?

Are your conclusions clear and supported by the narrative you have written?