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Instructions

Amount Description

Estimated Cost of Merchandise Inventory (What I need to be answered)

Effect of Errors in Physical Inventory Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 20Y1, Fonda incorrectly counted its inventory as $420,990 instead of the correct amount of $404,150. Enter all amounts as positive numbers. a. State the effects of the error on the December 31, 2011, balance sheet of Fonda Motorcycle Shop. Balance Sheet Items Overstated / Understated Amount Inventory Current Assets Total Assets Stockholders' Equity b. State the effects of the error on the income statement of Fonda Motorcycle Shop for the year ended December 31, 20Y1. Overstated / Understated Amount Income Statement Items Cost of Goods Sold Gross Profit Net Income C. If uncorrected, what would be the effects of the error on the 2012 income statement? Understated / Overstated Amount Income Statement Items Cost of Goods Sold Gross Profit Net Income $ d. If uncorrected, what would be the effects of the error on the December 31, 2012, balance sheet? 1. The December 31, 20Y2, balance sheet would be correct, since the 20Y1 inventory error reverses itself in 20Y2. 2. In the December 31, 20Y2, balance sheet, inventory would be understated. 3. In the December 31, 20Y2, balance sheet, inventory would be overstated. 4. In the December 31, 20Y2, balance sheet, retained earnings would be understated. On the basis of the following data: Cost Retail June 1 Inventory $ 170,000 $ 266,000 June 1-30 Purchases (net) 2,357,740 3,811,000 June 1-30 Sales 3,540,000 Estimate the cost of the merchandise inventory at June 30 by the retail method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter ratios as percentages rounded to one decimal place Amount Descriptions Estimated cost of goods sold Estimated gross profit Merchandise available for sale Inventory, June 1 Estimated inventory, June 30 Inventory, June 30, at retail Inventory, June 30, at estimated cost Purchases in June (net) Ratio of cost to retail price Sales for June Estimate the cost of the merchandise inventory at June 30 by the retail method. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter ratios as percentages rounded to one decimal place. Estimated Cost of Merchandise Inventory June 30 Cost Retail | - - *