Question #6-Inventory Errors and Estimation (11 marks) Part 1 The income statements (in thousands) for Winnipeg...

 

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Question #6-Inventory Errors and Estimation (11 marks) Part 1 The income statements (in thousands) for Winnipeg Windows are presented below. Net sales Cost of goods sold Beginning inventory Net purchases Cost of goods available Less ending inventory Cost of goods sold Gross margin Operating expenses Net income $65 195 260 70 2012 $360 190 170 119 $51 $55 135 190 65 2011 $275 125 150 109 $41 $70 130 200 55 2010 $240 145 95 72 $23 in early 2013, an audit was performed by Canada Revenue Agency. It was discovered that 2010 ending inventory had been overstated by $18,000 and 2012 ending inventory had been understated by $10,000. All other amounts were correct. Required: Determine whether each year's net income and owner's equity has been over or understated. Indicate, with support, the amount of any misstatement. (7 marks) Question #6-Inventory Errors and Estimation (11 marks) Part 1 The income statements (in thousands) for Winnipeg Windows are presented below. Net sales Cost of goods sold Beginning inventory Net purchases Cost of goods available Less ending inventory Cost of goods sold Gross margin Operating expenses Net income $65 195 260 70 2012 $360 190 170 119 $51 $55 135 190 65 2011 $275 125 150 109 $41 $70 130 200 55 2010 $240 145 95 72 $23 in early 2013, an audit was performed by Canada Revenue Agency. It was discovered that 2010 ending inventory had been overstated by $18,000 and 2012 ending inventory had been understated by $10,000. All other amounts were correct. Required: Determine whether each year's net income and owner's equity has been over or understated. Indicate, with support, the amount of any misstatement. (7 marks)

Answer rating: 100% (QA)

Net Sales Cost of goods sold Beginning Inventory Net Purchase Cost of goods available Less Ending In... View the full answer