Effects of inventory errors

Assignment Help Accounting Basics
Reference no: EM13911759

Effects of inventory errors. Following are condensed income statements for Uncle Bill's Home Improvement Center for the years ended December 31, 2014, and 2013:

886_262-B-A-I-A (3432).png

Uncle Bill was concerned about the operating results for 2014 and asked his recently hired accountant, "If sales increased in 2014, why was net income less than half of what it was in 2013?" In February of 2015, Uncle Bill got his answer: "The ending inventory reported in 2013 was overstated by $35,250 for merchandise that we were holding on consignment on behalf of Kirk's Servistar. We still keep some of their appliances in stock, but the value of these items was not included in the 2014 inventory count because we don't own them."
a. Recast the 2013 and 2014 income statements to take into account the correction of the 2013 ending inventory error.
b. Calculate the combined net income for 2013 and 2014 before and after the correction of the error. Explain to Uncle Bill why the error was corrected in 2014 before it was actually discovered in 2015.
c. What effect, if any, will the error have on net income and stockholders' equity in 2015? 

Reference no: EM13911759

Questions Cloud

Thinking about the potential size of the market : Costco is going to open a urben Costco, in thinking about the potential size of the market, Costco believes that critical factors are the size of the population, portion of the population that will visit the store and how much they will spend. Your w..
Find an estimate of the probability distribution of x : Find an estimate of the probability distribution of x = this song's rating by a randomly selected listener who is familiar with the song.
A primary source of stockholders'' equity is : A primary source of stockholders' equity is
Average titre value of the acid : In a standardization titration involving hydrochloric acid and sodium carbonate, a student recoirded the following results for the volume of hydrochloric acid used against 10.00mL of the sodium carbonate solution : 15.60; 14.50; 14.70 aqnd 14.20. ..
Effects of inventory errors : Effects of inventory errors. Following are condensed income statements for Uncle Bill's Home Improvement Center for the years ended December 31, 2014, and 2013:
What does this suggest about feasibility of such a strategy : Assume that your company needs dollars. It borrows euros at a lower interest rate than that for dollars. If interest rate parity exists and if the forward rate of the euro is a reliable predictor of the future spot rate, what does this suggest abo..
Differences among - stratified sample and systematic sample : In your own words, explain the differences among the following techniques: simple random sample; stratified sample, systematic sample, cluster sample, and convenience sample
Contract depending upon temperature : Expansion joints are used for materials that easily expand and contract depending upon its temperature. How much expansion can take place for a brass pipe 25.8 m long that experiences temperature changes of 75.2°C?
Solve value problem using laplace transforms : Write f(t) in terms of the Heaviside (step) function u∗, and then solve the following initial value problem using Laplace Transforms

Reviews

Write a Review

Accounting Basics Questions & Answers

  What was the depreciation expense for 2012

Referring to the information in the question, provide four examples of accounting policy choices that ANZ may have made in determining profit that may have increased this year's profit.

  Discuss some of enforcement of standards issues of the iasb

Discuss some of the enforcement of standards issues of the IASB that are not existent for the FASB?

  How can a person tell whether an entry to an expense

how can a person tell whether an entry to an expense account is payment for a legitimate expenditure or a means of

  What is the maximum permitted coverdell education

what is the maximum permitted coverdell education savings account contribution that benjamin and ester can make in 2011?

  Madlem inc produces and sells a single product whose

madlem inc. produces and sells a single product whose selling price is 240.00 per unit and whose variable expense is

  Video planet vp sells a big screen tv package consisting of

video planet vp sells a big screen tv package consisting of a 60-inch plasma tv a universal remote and on-site

  For both fifo and lifo calculate the sum of ending

boarders sells a snowboard xpert that is popular with snow board enthusiasts. below is information relating to

  Examining the general fund disclosures in a cafr

Examining the General Fund Disclosures in a Comprehensive Annual Financial Report (CAFR). Analysis this case focuses on a governmental unit's general fund.

  Twenty college fraternity brothers each placed 2500 in a

twenty college fraternity brothers each placed 2500 in a mutual fund account. they agreed that upon the death of a

  Prepare the necessary journal entries for rich

Prepare the necessary journal entries for Rich, Inc. from January 1, 2012 through July 1, 2013.

  Question on private business competition

Choose an article on Private Business Competition from a professional, economic, or management journal published in the last ten years such as The Freeman: Ideas On Liberty, The Economist, Forbes, The Cato Journal, Harvard Business Review, or Sloa..

  On may 31 2010 james logan company had a cash balance per

on may 31 2010 james logan company had a cash balance per books of 6781.50. the bank statement from farmers state bank

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd