Question :
9.The management of Dayton Ltd. erroneously understated its inventory during : 1241865
9.The management of Dayton Ltd. erroneously understated its inventory during 2015 by $28,000. Using the information below and assuming there are no distributions of retained earnings:(1) present a brief analysis with the accurate numbers and the numbers in error and (2) explain whether retained earnings would be overstated, understated, or be indifferent to the error at the end of 2016.
2015Sales: $60,000
2015Purchases: $50,000
2015 Cost of Goods Sold (before inventory error) $20,000
2016Sales: $210,000
2016Purchases: $60,000
2016Cost of Goods Sold (based on error numbers): $68,000
10.Yale Co. has valued its beginning and ending inventories at $4,000 and $7,000, respectively, during a period where cost of goods sold was $22,000. An auditor found an error in the valuation of the ending inventory and insisted that it be restated to $6,000. Calculate the adjusted cost of goods sold resulting from the inventory restatement.
11.Summers Company began business on August 1, 2015. During August, Summers made the following purchases:
August 3
100 units @ $10
$1,000
August 21
300 units @ $20
$6,000
Other information provided:
August sales
350 units at $50 each
August expenses excluding cost of goods sold
$7,200
August 31 current assets excluding inventory
$34,000
August 31 current liabilities
$26,000
Calculate Summers’ August 31 ending inventory under the FIFO and LIFO cost flow assumptions.
12.Yogi Company began operations on July 1. Below is its July income statement and the current portion of its balance sheet dated July 31. Each unit is sold for $80. Under the LIFO method of inventory, Yogi reported the following:
July 3
Purchased 60 units @ $50
$3,000
July 14
Purchased 40 units @ $60
2,400
Cost of goods available
$5,400
July 31
Inventory (10 @ $50)
500
Cost of goods sold
$4,900
Complete the following income statement and current portion of the balance sheet for Yogi for July using the FIFO cost flow assumption instead of LIFO.
Sales revenue . . . . . . . . . . . . . . . . . _____________________
Cost of goods sold . . . . . . . . . . . . . ._____________________
Gross profit . . . . . . . . . . . . . . . . . . . _____________________
13.A firm fraudulently overstated its December 31, 2014 and 2015 inventories by $4,000 and $7,000, respectively. What is the amount of 2014 and 2015 overstatements of cost of goods sold which results from these inventory overstatements?
Use the information that follows concerning Yarley’s Gift Store to answer problems 14-17.
Grandma’s Gift Store inventory and purchase information for July is as follows:
July 1
Beginning inventory
500 @ $4
July 10
Purchase
800 @ $5
July 31
Ending inventory
300
14.Grandma’s Gift Store uses the FIFO cost flow assumption. Calculate its cost of goods sold for the month of July and its ending inventory at July 31.
15.Grandma’s Gift Store uses the LIFO cost flow assumption. Calculate its cost of goods sold for July and its ending inventory at July 31.
