hi can you help me with this, are those problems related. can you help me with a

Question

hi can you help me with this, are those problems related. can you help me with at least one of them. thanks

OBJ. 6 PE 7-7A Effect of inventory errors During the taking of its physical inventory on August 31, 2019, Kate Interiors Company incorrectly counted its inventory as $366,900 instead of the correct amount of $378,500. Indicate the effect of the misstatement on Kate Interiors' August 31, 2019, balance sheet and income statement for the year ended August 31, 2019. PE 7-7B Effect of inventory errors During the taking of its physical inventory on December Indicate the effect of the misstatement on Waterjet sheet and income statement for the year ended December 31, 2019. OBJ. 6 of its physical inventory on December 31, 2019, Waterjet Bath Company unted its inventory as $728,660 instead of the correct amount of $719,880. Bath's December 31, 2019, balance

Explanation / Answer

. An incorrect inventory balance causes an error in the calculation of cost of goods sold and, therefore, an error in the calculation of gross profit and net income.

In first case actual inventory is $378500 and erroraneously has been counted as $366900..as a result of this the closing stock will be decreased and accordingly its profit will be reduced by(378500-366900)

=11600

In balance sheet the closing stock will be undervalued by $11600 and accordingly owner's equity will be understated as well.

In second case actual inventory is $719880 and erroraneously has been counted as $728660..as a result of this the closing stock will be increased and accordingly its profit will be increased by(728660-719880)i.e.8780$

In balance sheet the closing stock will be overvalued by $8780 and accordingly owner's equity will be overstated as well.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.