QS- 4-14

Impacts of Inventory error ees did not include $3,000 of incoming goods shipped by a supplier oh beten on key accounts point. These goods had been recorded in Merchandise Inventory, but they we count because they were in transit. This means shrinkage was incorrectly overstated by S re not included in the physical 3,000. P3 Compute the amount of overstatement a. Ending inventory or understatement for each of the following amounts for this period. b. Total assets c. Net income d. Total equity Exercise 4-13 Refer to the information in Exercise 4-12 and indicate whether the failure to include in-transit inventory as Impacts of Inventory error on key ratios A1 A2 part of the physical count results in an overstatement, understatement, or no effect on the following ra a. Gross margin ratio b. Profit margin ratio c. Acid-test ratio d. Current ratio Exercise 4-14 Compute the current ratio and acid-test ratio for each of the following separate cases. (Round ratios to two Computing and analyzing decimals.) Which company situation is in the best position to meet short-term obligations? Explain. acid-test and current ratios A1 Camaro GTO $2,000 $ 110 $1,000 Torino Cash. Short-term investments Current recelvables 50 580 350 470 700 2,600 2,4204.230 900 $5.200 $3,500 $7.410 Prepaid expenses 200 500 Total curent assets $2000 $1000 $3,800 Fit-for-Life Foods reports the following income statement accounts for the year ended December Prepare a multiple-step income statement that includes separate categories for net sales; cost of s sold; selling expenses; general and administrative expenses; and other revenues, gains, expenses, and Exercise 4-15 Preparing a multi-step income statement P4 S 6,250 Gain on sale of equipement Office supplies expense Insurance expense Sales Office salaries expese 700 1,300 220,000 Sales discounts Sales returns and aluwaxe 13,00