The Mason family operates a building supply store and counts the physical inventory once a year. The
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Question:
- The Mason family operates a building supply store and counts the physical inventory once a year. The value assigned to the year-end inventory was
- $45 000. They failed to count the inventory on four shelves in the warehouse. As a result, the year-end financial statements were prepared with an incorrect valuation for ending inventory. A couple of weeks after the statements were prepared, the omission was discovered and reported to the company's accountant. The value of the inventory missed was $7 000.
Required:
- Create a mini-income statement including the incorrect ending inventory on the TEMPLATE provided.
- Net sales for the period were $355 000; beginning inventory was $60 000; purchases were $64 000; and operating expenses were $150 000.
- Create a revised income statement with the correct ending inventory figure.
- Evaluate the effect of the omission on each of the following:
- cost of goods sold
- gross profit
- net income
- the balance sheet
Related Book For
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
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