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## Assuming the errors had not been corrected, indicate the dollar effect

\$15.99

\$15.99

Assuming the errors had not been corrected, indicate the dollar effect 1 Speer’s Hardware Store prepared the following analysis of cost of goods sold for the previous three years: 2010 2011 2012 Beginning inventory 1/1 â‚¬40,000 â‚¬18,000 â‚¬25,000 Cost of goods purchased 50,000 55,000 70,000 Cost of goods available for sale 90,000 73,000 95,000 Ending inventory 12/31 18,000 25,000 40,000 Cost of goods sold \$72,000 \$48,000 \$55,000 Net income for the years 2010, 2011, and 2012 was â‚¬70,000, â‚¬60,000, and â‚¬55,000, respectively. Since net income was consistently declining, Mr. Speer hired a new accountant to investigate the cause(s) for the declines. The accountant determined the following: 1. Purchases of â‚¬20,000 were not recorded in 2010. 2. The 2010 December 31 inventory should have been â‚¬24,000. 3. The 2011 ending inventory included inventory costing â‚¬8,000 that was purchased FOB destination and in transit at year end. 4. The 2012 ending inventory did not include goods costing â‚¬4,000 that were shipped on December 29 to Sampson Plumbing Company, FOB shipping point. The goods were still in transit at the end of the year. Instructions Determine the correct net income for each year. (Show all computations.) 2 Graves Pharmacy reported cost of goods sold as follows: 2011 2012 Beginning inventory \$ 54,000 \$ 64,000 Cost of goods purchased 847,000 891,000 Cost of goods available for sale 901,000 955,000 Ending inventory 64,000 55,000 Cost of goods sold \$837,000 \$900,000 Hill, the bookkeeper, made two errors: (1) 2011 ending inventory was overstated by \$6,000. (2) 2012 ending inventory was understated by \$15,000. Instructions Assuming the errors had not been corrected, indicate the dollar effect that the errors had on the items appearing on the financial statements listed below. Also indicate if the amounts are overstated (O) or understated (U). 2011 2012 Overstated/ Overstated/ Amount Understated Amount Understated Total assets \$_________ _______ \$_________ _______ Equity \$_________ _______ \$_________ _______ Cost of goods sold \$_________ _______ \$_________ _______ Net income \$_________ _______ \$_________ _______ Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help

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