The company uses the periodic system of inventory and its fiscal year-end is December 31. Ignore...

 

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The company uses the periodic system of inventory and its fiscal year-end is December 31. Ignore income tax effects. Consider each of the following independent scenarios: a. Your analysis of inventory indicates that inventory at the end of 2012 was overstated by $27,000 due to an inventory count error. Inventory at the end of 2013 was correctly stated. b. Invoices in the amount of $107,000 for inventory received in December 2012 were not entered in the books in 2012. They were recorded as purchases in January 2013 when they were paid. The goods were counted in the 2012 inventory count and included in ending inventory on the 2012 financial statements. c. Goods received on consignment valued at $89,000 were included in the physical count of goods at the end of 2013 and included in ending inventory on the 2013 financial statements. Requirements For each of the above a, b and c independent scenarios, indicate and explain the effect of the error (if any) in overstate how much, understate how much, or correct (no change): (i) 2012 income (ii) 2013 income (iii) 2013 Year-end R/E a. b. C. The company uses the periodic system of inventory and its fiscal year-end is December 31. Ignore income tax effects. Consider each of the following independent scenarios: a. Your analysis of inventory indicates that inventory at the end of 2012 was overstated by $27,000 due to an inventory count error. Inventory at the end of 2013 was correctly stated. b. Invoices in the amount of $107,000 for inventory received in December 2012 were not entered in the books in 2012. They were recorded as purchases in January 2013 when they were paid. The goods were counted in the 2012 inventory count and included in ending inventory on the 2012 financial statements. c. Goods received on consignment valued at $89,000 were included in the physical count of goods at the end of 2013 and included in ending inventory on the 2013 financial statements. Requirements For each of the above a, b and c independent scenarios, indicate and explain the effect of the error (if any) in overstate how much, understate how much, or correct (no change): (i) 2012 income (ii) 2013 income (iii) 2013 Year-end R/E a. b. C.

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i 2012 income ii 2013 income Overstate 27000 Understate 2700... View the full answer