Question
1. Inventory errors and income measurement. The income statements of Keagle Company for 20X3 and 20X4 follow. 20X3 20X4 Sales $100,000 $109,000 Cost of goods
1. Inventory errors and income measurement. The income statements of Keagle Company for 20X3 and 20X4 follow.
20X3 20X4
Sales $100,000 $109,000
Cost of goods sold $62,000 $74,000
Gross profit $38,000 $35,000
Expenses $26,000 $22,000
Net Income $12,000 $13,000
A recent review of the accounting records discovered that the 20X3 ending inventory had been understated by $4,000. a. Prepare corrected 20X3 and 20X4 income statements. b. What is the effect of the error on ending owners equity for 20X3 and 20X4?
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Auditing A Practical Approach
Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton, Valerie Warren
1st Extended Canadian Edition
1118878418, 9781118878415
