11i16i21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha Student: Phuong Ha Instructor: Suzanna Karam Singh Assignment: Homework Assignment 3 - Date: 11/16/21 Course: ACCT1036 (3) Ch 2 1. Your employer, Prairie Tours, has just hired an ofce manager who does not understand accounting. The Prairie Tours trial balance lists Cash of $57,800. Write a short memo to the office manager, explaining the accounting process that produced this listing on the trial balance. Mention debits, credits, journal, ledger, posting, and trial balance. TO: Office Manager FROM: StudentAccountant Each time Prairie Tours received cash, accountants recorded the transaction in the journal by debiting the Cash account. Accountants recorded cash payments by making a journal entry that included a credit to Cash. Debits in the journal were posted as debits lo the Cash account in the ledger and credits were posted as credits . At the end of the period, accountants listed each account, along with its balance, on the trial balance . Cash had a balance of $57,800. htlps:iixlitemprod.pearsoncmg.comi'apiiv1 lprintihighered 1i12 11/16/21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha 2. a. Indicate on which side of the accounts-debit (Dr) or Credit (Cr)-you would record an increase. b. Indicate on which side of the accounts-debit (Dr) or Credit (Cr)-you would record a decrease. (Click the icon to view the part a accounts.) 2(Click the icon to view the part b accounts.) a. Select debit (Dr) or credit (Cr) for each account. Accounts Receivable Debit (Dr) Salaries Expense Debit (Dr) John Ladner, Capital Credit (Cr) Interest Payable Credit (Cr) Service Revenue Credit (Cr) Furniture Debit (Dr) b. Select debit (Dr) or credit (Cr) for each account. Note Payable Debit (Dr) Land Credit (Cr) Cash Credit (Cr) Accounts Payable Debit (Dr) Income Tax Payable Debit (Dr) Income Tax Expense Credit (Cr) 1: Part a Accounts Accounts Receivable Salaries Expense John Ladner, Capital Interest Payable Service Revenue Furniture 2: Part b accounts Note Payable Land Cash Accounts Payable Income Tax Payable Income Tax Expense https://xlitemprod.pearsoncmg.com/api/v1/print/highered 2/1211/16/21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha 3. The following transactions occurred for Anderson Moving Company. (Click the icon to view the transactions.) Journalize the transactions of Anderson Moving Company. Include an explanation with each journal entry. Use the following accounts: Cash; Accounts Receivable; Office Supplies; Equipment; Accounts Payable; Note Payable; B. Anderson, Capital; B. Anderson, Withdrawals; Service Revenue; Utilities Expense. (Record debits first, then credits. Explanations will appear on the last line of the journal entry table.) July 2: Received $10,000 contribution from Bill Anderson in exchange for capital. Date Accounts and Explanation Debit Credit Jul. 2 Cash 10,000 B. Anderson, capital 10,000 Owner contribution. July 4: Paid utilities expense of $400. Date Accounts and Explanation Debit Credit Jul. 4 Utilities expense 400 Cash 400 Paid cash expenses. July 5: Purchased equipment on account, $2, 100. Date Accounts and Explanation Debit Credit Jul. 5 Equipment 2, 100 Accounts payable 2,100 Purchase of equipment on account. July 10: Performed service for a client on account, $2,000. Date Accounts and Explanation Debit Credit Jul. 10 Accounts receivable 2,000 Service revenue 2,000 Performed services on account. July 12: Borrowed $7,000 cash, signing a note payable. https://xlitemprod.pearsoncmg.com/api/v1/print/highered 3/1211/16/21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha Date Accounts and Explanation Debit Credit Jul. 12 Cash 7,000 Note payable 7,000 Borrowed cash by signing note. July 19: The owner, Bill Anderson, withdrew $500 cash from the business. Date Accounts and Explanation Debit Credit Jul. 19 B. Anderson, withdrawals 500 Cash 500 Owner withdrawal. July 21: Purchased office supplies for $800 and paid cash. Dat Accounts and Explanation Debit Credit Jul. 21 Office supplies 800 Cash 800 Purchase of office supplies with cash. July 27: Paid the liability from July 5. Date Accounts and Explanation Debit Credit Jul. 27 Accounts payable 2, 100 Cash 2,100 Paid cash on account. 3: Transactions July 2 Received $10,000 contribution from Bill Anderson in exchange for capital. 4 Paid utilities expense of $400. 5 Purchased equipment on account, $2, 100. 10 Performed service for a client on account, $2,000. 12 Borrowed $7,000 cash, signing a note payable. 19 The owner, Bill Anderson, withdrew $500 cash from the business. 21 Purchased office supplies for $800 and paid cash. 27 Paid the liability from July 5. https://xlitemprod.pearsoncmg.com/api/v1/print/highered 4/1211/16/21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha 4. Calculate the account balance for each of the following T-accounts: *(Click the icon to view the t-accounts.) (If a box is not used in the T-accounts, leave the box empty; do not enter a zero.) Accounts Receivable Cash Accounts Payable 2,700 2,700 67,500 4,200 1, 100 4,600 5,800 1, 100 16,800 12,300 700 4,900 850 4,090 Bal. Bal. Bal. Bal. Bal. Bal . 4: Data Table Accounts Receivable Cash Accounts Payable 2,700 2,700 67,500 4,200 1, 100 4,600 5,800 1, 100 16,800 12,300 700 4,900 850 4,090 https://xlitemprod.pearsoncmg.com/api/v1/print/highered 5/1211l16l21. 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha 5. The journal of AEden's Baking School for July 2019 is provided in the accompanying table. 5(Click on the icon to view the journal entries.) Required 1. Describe each transaction. 2. Post to the T-accounts which have been set up for you. Identify each transaction by date. Compute the balance in each account after posting. The T-accounts have been set up using the following account numbers: Cash, #1000; Accounts Receivable, #1200; Baking Supplies, #1400; Accounts PayableI #2000; Aiden BeltI Capital, #3000; Service Revenue. #4000; Advertising Expense, #5100; Rent Expense, #5600; Utilities Expense, #5800. Requirement 1. Describe each transaction. Jul, 2 Investment of cash by the owner 3 Payment of rent expense 9 Purchase of baking supplies on account (on credit) 11 Service provided on account 22 Collection on account 25 Payment of advertising expense 27 Payment on account 31 Receipt of a utilities bill and recording the expense on account Requirement 2. Post to the T-accounts which have been set up for you. Identify each transaction by date. Compute the balance in each account after posting. (Post transactions in the order that they appear in the journal using the first available cell on the appropriate debit or credit side of the T-account. Leave any unused cells blank.) https:Iixlitemprod.pearsoncmg.comi'apilvl lprintJhighered 6l12 \f11/16/21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha General Journal Page 5 Date Accounts Debi Credit Jul. 2 Cash $ 6,000 Aiden Belt, capital $ 6,000 3 Rent expense 1,550 Cash 1,550 9 Baking supplies 56 Accounts payable 56 11 Accounts receivable 1,640 Service revenue 1,640 22 Cash 360 Accounts receivable 360 25 Advertising expense 730 Cash 730 27 Accounts payable 56 Cash 56 31 Utilities expense 580 Accounts payable 580 https://xlitemprod.pearsoncmg.com/api/v1/print/highered 8/1211l16l21. 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha 6. Yula's Yoga engaged in the following transactions during March 2020, its first month of operations. 6(Click on the icon to view the transactions.) Mammy Requirement 1. Record the entries in the T-accounts that have been set up for you. Identify transactions by their date. Date the ending balance of each account March 31. (If a box is not used in the T-accounts, leave the box empty; do not select a label or enter a zero.) Cash Yula Gregore, Capital Mar Mar |:| |:| Bal. Bal. I:| Accounts Payable (11) Mar Mar. |:| Bet. Bet. I:I Rent Expense Servrce Revenue (1)3) (14) (15) Mar Mar. |:| Mar. |:| I: H: \"9' Bal. |:l Bal. |:I Accounts Receivable (21) (22) Mar. Mar. |:| Bal. I: Requirement 2. Prepare the trial balance of Yula's Yoga at March 31, 2020. Now using the totals from T-accounts, prepare the trial balance of Yula's Yoga at March 31, 2020. Start by preparing the heading for the adjusted trial balance. Remember that each line of the heading is very important and should be in a specic order. Then, complete the body of the trial balance by selecting the accounts and entering the account balances from the T-accounts. Compute the total debits and credits; the trial balance must balance to be correct. (If a box is not used in the trial balance. leave the box empty; do not select a label or enter a zero.) htlpsjixlitemprod.pearsonomg.comi'apilv'llprintlhighered 9l12 11/16/21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha Account Debit Credit (26 (27) (28 (29 (30) (31) (32) Total 6: Transactions Mar. 1 The business received a $15,000 cash investment from Yula Gregore to start Yula's Yoga. 1 Paid $4,000 cash to rent a yoga studio for the month of March. 4 Purchased studio supplies for $4,000 on account. 6 Presented a wellness seminar for a corporate customer and received cash, $3,000. 9 Paid $1,000 on accounts payable. 17 Taught yoga classes for customers on account, $800. 7: Required 1. Record the entries in the T-accounts which have been set up for you. Identify transactions by their date. Date the ending balance of each account Mar. 31. 2. Prepare the unadjusted trial balance of Yula's Yoga at March 31, 2020. (1) 0 09 (2) 0 09 (3) 0 09 (4) 0 09 (5) 0 09 01 0 17 01 0 17 01 0 17 01 0 17 01 0 17 0 4 04 0 4 0 4 0 4 0 6 0 6 06 0 6 0 6 (6) 0 09 (7) 0 09 (8) 0 09 (9) 0 09 (10) O 09 01 0 17 01 0 17 01 0 17 01 0 17 01 0 17 0 4 0 4 0 4 0 4 0 4 0 6 0 6 0 6 0 6 0 6 (11) O 0 9 (12) O 09 (13) 0 09 (14) 0 09 (15) O 09 01 0 17 01 0 17 01 0 17 01 0 17 01 0 17 0 4 0 4 0 4 0 4 0 4 0 6 0 6 0 6 0 6 0 6 (16) O 09 (17) O 09 (18) 0 09 (19) 0 09 (20) O 0 9 01 0 17 01 0 17 01 0 17 01 0 17 01 0 17 0 4 0 4 0 4 0 4 0 6 )4 0 6 0 6 0 6 0 6 https://xlitemprod.pearsoncmg.com/api/v1/print/highered 10/1211/16/21, 8:12 PM Homework Assignment 3 - Ch 2-Phuong Ha (21) 0 0 9 (22) 0 09 (23) C O Trial Balance 01 0 17 01 017 O Balance Sheet O Yula's Yoga 0 4 0 4 O March 31, 2020 0 6 0 6 For the Month Ended March 31, 2020 (24) O Trial Balance O Balance Sheet O Yula's Yoga March 31, 2020 O For the Month Ended March 31, 2020 (25) O Trial Balance O Balance Sheet O Yula's Yoga O March 31, 2020 O For the Month Ended March 31, 2020 (26) O O Cellphone expense O Studio supplies O Accounts payable O Equipment O Utilities expense O Accounts receivable O Rent expense O Yula Gregore, capital O Cash O Service revenue O Yula Gregore, withdrawals (27) O O Cellphone expense O Studio supplies O Accounts payable O Equipment O Utilities expense O Accounts receivable O Rent expense O Yula Gregore, capital O Cash O Service revenue O Yula Gregore, withdrawals (28) O O Cellphone expense O Studio supplies O Accounts payable O Equipment O Utilities expense Accounts receivable O Rent expense O Yula Gregore, capital O Cash Service revenue O Yula Gregore, withdrawals (29) O O Cellphone expense O Studio supplies O Accounts payable O Equipment O Utilities expense O Accounts receivable O Rent expense O Yula Gregore, capital O Cash O Service revenue O Yula Gregore, withdrawals (30) O O Cellphone expense O Studio supplies O Accounts payable O Equipment O Utilities expense O Accounts receivable O Rent expense O Yula Gregore, capital O Cash Service revenue O Yula Gregore, withdrawals https://xlitemprod.pearsoncmg.com/api/v1/print/highered 11/1211l16121, 8:20 PM Assignment # 2-Phuong Ha Student: Phuong Ha Instructor: Suzanna Karam Singh Date: 11/16/21 Course: ACCT1036 (3) Assignment: Assignment # 2 1. The nancial records of Homeland Drawing and Home Plans show these data (in thousands): 1(Click the icon to View the income statements.) In early 2021, a potential investor's auditors discovered that the ending inventory of 2018 had been overstated by $7 thousand. Also, the ending inventory for 2020 had been understated by $9 thousand. The ending inventory at December 31, 2019, was correct. Required 1. Show corrected comparative income statements for the three years. 2. State whether each year's net income as reported here and the related owner's equity amounts are understated or overstated. For each incorrect gure, indicate the amount of the understatement or overstatement. Requirement 1. Show corrected comparative income statements for the three years. Complete the corrected comparative income statement: (Use a minus sign or parentheses for any losses.) Homeland Drawing and Home Plans Income Statements (thousands) For the Years Ended December 31, 2020, 2019, and 2018 Net sales revenue Cost of goods sold: Beginning inventory Net purchases Cost of goods available Less: Ending inventory Cost of goods sold Gross margin Operating expenses Net income Requirement 2. State whether each year's net income as reported here and the related owner's equity amounts are understated or overstated. For each incorrect gure, indicate the amount of the understatement or overstatement. State whether each year's net income before correction was overstated or understated and the amount of the misstatement. (If the net income was correct. leave the value cell blank.) Year: Prior to correction net income was 2020 |:| thousand. 2019 I: thousand- 2018 |:| thousand- State whether each year's owner's equity before correction was overstated, understated, or correct. If the owner's equity was overstated or understated, enter the amount. (If the owner's equity was correct, leave the value cell blank.) htlpstlixlitem prod.pearsoncmg .comi'apilv'i lprintJhighered 1M 5 11/1 6I21. 8:20 PM Assignment # 2-F'huong Ha Year: Prior to correction owner's equity was 2020 (4) I ) I:| thousand. 2019 (5 |:I thousand. 2013 (6) E thousand. 1: Income Statements Net sales revenue Cost of goods sold: Beginning inventory Net purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross margin Operating expenses Net income (1) O 0 correct 0 overstated by O understated by (5) O 0 correct 0 overstated by O understated by (2) O 0 correct 0 overstated by O understated by (5) O 0 correct O overstated by O understated by httpszlixlitem prod.pearsoncmg .coml'apilv'l [printlhighered (3) O 0 correct 0 overstated by O understated by (4) O 0 correct 0 overstated by O understated by 2115 11l16l21, 8:20 PM Assignment # 2-F'huong Ha 2. Hustle Supplies has a periodic inventory system and uses the gross margin method of estimating inventories for interim nancial statements. The business had the following account balances for the scal year ended May 31, 2020: 2(Click the icon to view the data.) mama Requirement 1. Use the gross margin method to estimate the cost of the business's ending inventory, assuming the business has an average gross margin rate of 40 percent. (Use parentheses or a minus sign when subtracting numbers. Round amounts to the nearest whole dollar.) Net purchases (4) Cost of goods available Estimated ending inventory Requirement 2. The business has done a physical count of the inventory on hand on May 31, 2020. For convenience, this inventory was calculated using the retail selling prices marked on the goods, which amounted to $280,000. Use the information from requirement 1 and the gross margin method to calculate the cost of the inventory counted. The cost of inventory counted is $ . (Round your answers to the nearest whole dollar.) 2: Data Inventory: June 1, 2019 $ 150,000 Purchases 1,350,000 Purchase returns and allowances 42,000 Freight-in 36,000 Sales 2,100,000 Sales returns and allowances 50,000 3: Required 1. Use the gross margin method to estimate the cost of the business's ending inventory, assuming the business has an average gross margin rate of 40 percent. 2. The business has done a physical count of the inventory on hand on May 31, 2020. For convenience, this inventory was calculated using the retail selling prices marked on the goods, which amounted to $280,000. Use the information from requirement 1 and the gross margin method to calculate the cost of the inventory counted. httpstlixlitem prodpearsoncmg .comr'apilv'i lprintJhighered 3l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha ( 1) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (2) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory O Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (3) O O Estimated cost of goods sold 0 Beginning inventory Ci Estimated ending inventory O Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (4) O 0 Estimated cost of goods sold 0 Beginning inventory 0 Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (5) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases htlpsrlixlitem prodpearsoncmg .comr'apilv1 lprintjhighered 4l15 11l16l21. 8:20 PM Assignment # 2-Phuong He (6) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (T) O 0 Estimated cost of goods sold O Beginning inventory 0 Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases htlpsn'ixlitem prod.pearsoncmg .comr'apilv'l lprintjhighered 5l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha 3. Suffolk IT Solutions uses a perpetual inventory system for the purchase and sale ofjump drive inventory and had the following information available on August 31. 2020: 4 (Click the icon to View the purchases and sales.) Equired5 Requirement 1a. Calculate the cost of goods sold for August under the movingweighted-average cost method. Then nd the total quantities and costs for purchases and cost of goods sold as well as the ending inventory on hand. (Round unit costs to the nearest cent. Round all other calculations to the nearest whole dollar.) Purchases Cost of Goods Sold Inventory on Hand Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Requirement 1b. Calculate the cost of goods sold and the cost of the ending inventory for August under the FIFO cost method. (Round unit costs to the nearest cent. Round all other calculations to the nearest whole dollar. Enter the oldest inventory layer rst.) httpszllxlitem prod.pearsonomg .comi'apilv'l [printlhighered 6l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha Purchases Cost of Goods Sold Inventory on Hand Unit Cost Total Cost Unit Cost Total Cost \"mm UJMJE H mm MU U] U HUME M U] Requirement 2. Prepare the journal entries required to record the transactions using the perpetual inventory system with FIFO costing. Assume all purchases and sales are made on account. (Record debits first, then credits. No explanations are required. Round amounts to the nearest whole dollar.) U D August 7: Purchased 2,400 units at $16 per unit. Journal Entry August 8: Sold 1,760 units at $24 per unit. First record the sale on August 8. Journal Entry httpszlixlitem prod.pearsoncmg .comr'apilv'i [printlhighered 7M 5 11l16l21. 8:20 PM Assignment # 2-F'huong Ha Now record the cost of the inventory that was sold on August 8. Journal Entry August 12: Purchased 1,590 units at $17 per unit. Journal Entry August 16: Sold 2,560 units at $25 per unit. First record the sale on August 16. Journal Entry Now record the cost of the inventory that was sold on August '16. Journal Entry August 21: Purchased 1,860 units at $19 per unit. Journal Entry httpszlixlitem prod.pearsoncmg .comr'apilv'l [printlhighered Bl15 11l16l21. 8:20 PM Assignment # 2-F'huong Ha August 25: Purchased 2,640 units at $21 per unit. Journal Entry August 29: Sold 3,450 units at $26 per unit. First record the sale on August 29. Journal Entry Now record the cost of the inventory that was sold on August 29. Journal Entry Requirement 3. An internal audit has discovered that two new employeesan accounting clerk and an employee from the purchasing departmenthave been stealing merchandise and covering up the shortage by changing the inventory records. The external auditors examined the accounting records prior to the employment of the two individuals and noted that the company has an average gross margin rate of 27 percent. Use the gross margin method to estimate the cost of the inventory shortage (under the FIFO costing method). (Note: The physical count matched the estimate.) Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. Complete the table provided below. Total cost of goods available for sale Less: Estimated cost of goods sold Estimated merchandise inventoryAug. 31 :| Inventory FIFO balanceAug. 31 Estimated inventory shortage Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. 0 A. The inventory from the physical count and the accounting records are the same, but the htlpsjixlitem prod.pearsoncmg .comr'apilv't lprinllhighered 9l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha inventory from the estimate is different due to the accounting clerk stealing the merchandise. Only the accounting records of the inventory are used on the nancial statements. O B. The inventory from the physical count and the estimates are the same, but the inventory from the accounting records is different due to the accounting clerk changing the records. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 0 C. The inventory from the physical count and the accounting records are the same, but the inventory from the estimate is different due to the accounting clerk changing the records. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 0 D. The inventory from the physical count and the estimates are the same, but the inventory from the accounting records is different due to the accounting clerk changing the records. Only the physical count of the inventory is used on the nancial statements. 0 E. The inventory from the estimate and the accounting records are the same, but the inventory from the physical count is different due to the accounting clerk stealing the merchandise. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 4: Purchases and Sales Purchases and Sales Number of Units Aug. 1 Balance of inventory at $17 per unit 860 7 Purchased at $16 per unit 2.400 8 Sold for $24 each 1,760 12 Purchased at $17 per unit 1.590 16 Sold for $25 each 2,560 21 Purchased at $19 per unit 1,860 25 Purchased at $21 per unit 2,640 29 Sold for $26 each 3,450 5: Required 1. Calculate the cost of goods sold and the cost of the ending inventory for August under each of the following inventory costing methods: (a) moving-weighted-average cost and (b) FIFO cost. 2. Prepare the journal entries required to record the transactions using the perpetual inventory system with FIFO costing. Assume all purchases and sales are made on account. 3. An internal audit has discovered that two new employeesan accounting clerk and an employee from the purchasing departmenthave been stealing merchandise and covering up the shortage by changing the inventory records. The external auditors examined the accounting records prior to the employment of the two individuals and noted that the company has an average gross margin rate of 27 percent. Use the gross margin method to estimate the cost of the inventory shortage (under the FIFO costing method). (Note: The physical count matched the estimate.) Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. (1) O 0 Cost of Goods Sold 0 Sales Revenue O Accounts Payable 0 Inventory 0 Selling Expenses C) Accounts Receivable 0 Sales Discounts O Supplies O Cash 0 Sales Returns and Allowances (2) O 0 Cost of Goods Sold O Sales Revenue 0 Accounts Payable 0 Inventory O Selling Expenses O Accounts Receivable 0 Sales Discounts 0 Supplies 0 Cash 0 Sales Returns and Allowances httpsrlixlitem prod.pearsoncmg .comi'apilv1 lprintjhighered 10l15 11/16121, 8:20 PM (3) O O Accounts Payable 0 Accounts Receivable O Cash (4) O O Accounts Payable O Accounts Receivable O Cash (5) O O Accounts Payable O Accounts Receivable O Cash (6) O O Accounts Payable O Accounts Receivable O Cash (7) O O Accounts Payable O Accounts Receivable O Cash (8) O O Accounts Payable O Accounts Receivable O Cash (9) O O Accounts Payable O Accounts Receivable Assignment # 2-Phuong Ha O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold O Inventory O Sales Discounts 0 Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold O Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold 0 Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies 0 Cost of Goods Sold O Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold O Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold 0 Inventory O Sales Discounts O Sales Revenue 0 Selling Expenses O Supplies O Cash O Sales Returns and Allowances (10) O O Cost of Goods Sold O Sales Revenue O Accounts Payable O Inventory O Selling Expenses O Accounts Receivable O Sales Discounts O Supplies 0 Cash 0 Sales Returns and Allowances (11) O O Cost of Goods Sold O Sales Revenue O Accounts Payable O Inventory 0 Accounts Receivable O Sales Discounts O Selling Expenses O Supplies O Cash O Sales Returns and Allowances ht'tpstlixlitem prod.pearsoncmg .comi'apilv'l lprintJhighered 11/15 11/16121, 8:20 PM (12) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (13) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (14) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (15) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (16) O 0 Accounts Payable 0 Accounts Receivable O Cash (17) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (18) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (19) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (20) O 0 Accounts Payable 0 Accounts Receivable 0 Cash Assignment # 2-Phuong Ha 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory O Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances httpstlixlitem prodpearsoncmg .comr'apilv'l lprintJhighered 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue O Selling Expenses O Supplies 1215 11/16121, 8:20 PM (21) (22) (23) (24) (25) (26) (27) (28) (29) O 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash Assignment # 2-Phuong Ha 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances O Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory O Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances httpstlixlitem prodpearsoncmg .comr'apilv'l lprintJhighered 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue O Selling Expenses O Supplies 13/15 11/16121, 8:20 PM (30) (31) (32) (33) (34) (35) (36) (37) (38) O 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable O Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash Assignment # 2-Phuong He 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory O Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances httpstlixlitem prodpearsoncmg .comr'apilv'l lprintJhighered 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue O Selling Expenses O Supplies 14l15 11l16121, 8:20 PM Assignment # 2-Phuong Ha Student: Phuong Ha Instructor: Suzanna Karam Singh Date: 11/16/21 Course: ACCT1036 (3) Assignment: Assignment # 2 1. The nancial records of Homeland Drawing and Home Plans show these data (in thousands): 1(Click the icon to View the income statements.) In early 2021, a potential investor's auditors discovered that the ending inventory of 2018 had been overstated by $7 thousand. Also, the ending inventory for 2020 had been understated by $9 thousand. The ending inventory at December 31, 2019, was correct. Required 1. Show corrected comparative income statements for the three years. 2. State whether each year's net income as reported here and the related owner's equity amounts are understated or overstated. For each incorrect gure, indicate the amount of the understatement or overstatement. Requirement 1. Show corrected comparative income statements for the three years. Complete the corrected comparative income statement: (Use a minus sign or parentheses for any losses.) Homeland Drawing and Home Plans Income Statements (thousands) For the Years Ended December 31, 2020, 2019, and 2018 Net sales revenue Cost of goods sold: Beginning inventory Net purchases Cost of goods available Less: Ending inventory Cost of goods sold Gross margin Operating expenses Net income Requirement 2. State whether each year's net income as reported here and the related owner's equity amounts are understated or overstated. For each incorrect gure, indicate the amount of the understatement or overstatement. State whether each year's net income before correction was overstated or understated and the amount of the misstatement. (If the net income was correct. leave the value cell blank.) Year: Prior to correction net income was 2020 |:| thousand. 2019 I: thousand- 2018 |:| thousand- State whether each year's owner's equity before correction was overstated, understated, or correct. If the owner's equity was overstated or understated, enter the amount. (If the owner's equity was correct, leave the value cell blank.) htlpstlixlitem prod.pearsoncmg .comi'apilv'i lprintJhighered 1M 5 11/1 6I21. 8:20 PM Assignment # 2-F'huong Ha Year: Prior to correction owner's equity was 2020 (4) I ) I:| thousand. 2019 (5 |:I thousand. 2013 (6) E thousand. 1: Income Statements Net sales revenue Cost of goods sold: Beginning inventory Net purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross margin Operating expenses Net income (1) O 0 correct 0 overstated by O understated by (5) O 0 correct 0 overstated by O understated by (2) O 0 correct 0 overstated by O understated by (5) O 0 correct O overstated by O understated by httpszlixlitem prod.pearsoncmg .coml'apilv'l [printlhighered (3) O 0 correct 0 overstated by O understated by (4) O 0 correct 0 overstated by O understated by 2115 11l16l21, 8:20 PM Assignment # 2-F'huong Ha 2. Hustle Supplies has a periodic inventory system and uses the gross margin method of estimating inventories for interim nancial statements. The business had the following account balances for the scal year ended May 31, 2020: 2(Click the icon to view the data.) mama Requirement 1. Use the gross margin method to estimate the cost of the business's ending inventory, assuming the business has an average gross margin rate of 40 percent. (Use parentheses or a minus sign when subtracting numbers. Round amounts to the nearest whole dollar.) Net purchases (4) Cost of goods available Estimated ending inventory Requirement 2. The business has done a physical count of the inventory on hand on May 31, 2020. For convenience, this inventory was calculated using the retail selling prices marked on the goods, which amounted to $280,000. Use the information from requirement 1 and the gross margin method to calculate the cost of the inventory counted. The cost of inventory counted is $ . (Round your answers to the nearest whole dollar.) 2: Data Inventory: June 1, 2019 $ 150,000 Purchases 1,350,000 Purchase returns and allowances 42,000 Freight-in 36,000 Sales 2,100,000 Sales returns and allowances 50,000 3: Required 1. Use the gross margin method to estimate the cost of the business's ending inventory, assuming the business has an average gross margin rate of 40 percent. 2. The business has done a physical count of the inventory on hand on May 31, 2020. For convenience, this inventory was calculated using the retail selling prices marked on the goods, which amounted to $280,000. Use the information from requirement 1 and the gross margin method to calculate the cost of the inventory counted. httpstlixlitem prodpearsoncmg .comr'apilv'i lprintJhighered 3l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha ( 1) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (2) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory O Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (3) O O Estimated cost of goods sold 0 Beginning inventory Ci Estimated ending inventory O Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (4) O 0 Estimated cost of goods sold 0 Beginning inventory 0 Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (5) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases htlpsrlixlitem prodpearsoncmg .comr'apilv1 lprintjhighered 4l15 11l16l21. 8:20 PM Assignment # 2-Phuong He (6) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (T) O 0 Estimated cost of goods sold O Beginning inventory 0 Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases htlpsn'ixlitem prod.pearsoncmg .comr'apilv'l lprintjhighered 5l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha 3. Suffolk IT Solutions uses a perpetual inventory system for the purchase and sale ofjump drive inventory and had the following information available on August 31. 2020: 4 (Click the icon to View the purchases and sales.) Equired5 Requirement 1a. Calculate the cost of goods sold for August under the movingweighted-average cost method. Then nd the total quantities and costs for purchases and cost of goods sold as well as the ending inventory on hand. (Round unit costs to the nearest cent. Round all other calculations to the nearest whole dollar.) Purchases Cost of Goods Sold Inventory on Hand Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Requirement 1b. Calculate the cost of goods sold and the cost of the ending inventory for August under the FIFO cost method. (Round unit costs to the nearest cent. Round all other calculations to the nearest whole dollar. Enter the oldest inventory layer rst.) httpszllxlitem prod.pearsonomg .comi'apilv'l [printlhighered 6l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha Purchases Cost of Goods Sold Inventory on Hand Unit Cost Total Cost Unit Cost Total Cost \"mm UJMJE H mm MU U] U HUME M U] Requirement 2. Prepare the journal entries required to record the transactions using the perpetual inventory system with FIFO costing. Assume all purchases and sales are made on account. (Record debits first, then credits. No explanations are required. Round amounts to the nearest whole dollar.) U D August 7: Purchased 2,400 units at $16 per unit. Journal Entry August 8: Sold 1,760 units at $24 per unit. First record the sale on August 8. Journal Entry httpszlixlitem prod.pearsoncmg .comr'apilv'i [printlhighered 7M 5 11l16l21. 8:20 PM Assignment # 2-F'huong Ha Now record the cost of the inventory that was sold on August 8. Journal Entry August 12: Purchased 1,590 units at $17 per unit. Journal Entry August 16: Sold 2,560 units at $25 per unit. First record the sale on August 16. Journal Entry Now record the cost of the inventory that was sold on August '16. Journal Entry August 21: Purchased 1,860 units at $19 per unit. Journal Entry httpszlixlitem prod.pearsoncmg .comr'apilv'l [printlhighered Bl15 11l16l21. 8:20 PM Assignment # 2-F'huong Ha August 25: Purchased 2,640 units at $21 per unit. Journal Entry August 29: Sold 3,450 units at $26 per unit. First record the sale on August 29. Journal Entry Now record the cost of the inventory that was sold on August 29. Journal Entry Requirement 3. An internal audit has discovered that two new employeesan accounting clerk and an employee from the purchasing departmenthave been stealing merchandise and covering up the shortage by changing the inventory records. The external auditors examined the accounting records prior to the employment of the two individuals and noted that the company has an average gross margin rate of 27 percent. Use the gross margin method to estimate the cost of the inventory shortage (under the FIFO costing method). (Note: The physical count matched the estimate.) Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. Complete the table provided below. Total cost of goods available for sale Less: Estimated cost of goods sold Estimated merchandise inventoryAug. 31 :| Inventory FIFO balanceAug. 31 Estimated inventory shortage Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. 0 A. The inventory from the physical count and the accounting records are the same, but the htlpsjixlitem prod.pearsoncmg .comr'apilv't lprinllhighered 9l15 11l16l21. 8:20 PM Assignment # 2-Phuong Ha inventory from the estimate is different due to the accounting clerk stealing the merchandise. Only the accounting records of the inventory are used on the nancial statements. O B. The inventory from the physical count and the estimates are the same, but the inventory from the accounting records is different due to the accounting clerk changing the records. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 0 C. The inventory from the physical count and the accounting records are the same, but the inventory from the estimate is different due to the accounting clerk changing the records. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 0 D. The inventory from the physical count and the estimates are the same, but the inventory from the accounting records is different due to the accounting clerk changing the records. Only the physical count of the inventory is used on the nancial statements. 0 E. The inventory from the estimate and the accounting records are the same, but the inventory from the physical count is different due to the accounting clerk stealing the merchandise. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 4: Purchases and Sales Purchases and Sales Number of Units Aug. 1 Balance of inventory at $17 per unit 860 7 Purchased at $16 per unit 2.400 8 Sold for $24 each 1,760 12 Purchased at $17 per unit 1.590 16 Sold for $25 each 2,560 21 Purchased at $19 per unit 1,860 25 Purchased at $21 per unit 2,640 29 Sold for $26 each 3,450 5: Required 1. Calculate the cost of goods sold and the cost of the ending inventory for August under each of the following inventory costing methods: (a) moving-weighted-average cost and (b) FIFO cost. 2. Prepare the journal entries required to record the transactions using the perpetual inventory system with FIFO costing. Assume all purchases and sales are made on account. 3. An internal audit has discovered that two new employeesan accounting clerk and an employee from the purchasing departmenthave been stealing merchandise and covering up the shortage by changing the inventory records. The external auditors examined the accounting records prior to the employment of the two individuals and noted that the company has an average gross margin rate of 27 percent. Use the gross margin method to estimate the cost of the inventory shortage (under the FIFO costing method). (Note: The physical count matched the estimate.) Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. (1) O 0 Cost of Goods Sold 0 Sales Revenue O Accounts Payable 0 Inventory 0 Selling Expenses C) Accounts Receivable 0 Sales Discounts O Supplies O Cash 0 Sales Returns and Allowances (2) O 0 Cost of Goods Sold O Sales Revenue 0 Accounts Payable 0 Inventory O Selling Expenses O Accounts Receivable 0 Sales Discounts 0 Supplies 0 Cash 0 Sales Returns and Allowances httpsrlixlitem prod.pearsoncmg .comi'apilv1 lprintjhighered 10l15 11/16121, 8:20 PM (3) O O Accounts Payable 0 Accounts Receivable O Cash (4) O O Accounts Payable O Accounts Receivable O Cash (5) O O Accounts Payable O Accounts Receivable O Cash (6) O O Accounts Payable O Accounts Receivable O Cash (7) O O Accounts Payable O Accounts Receivable O Cash (8) O O Accounts Payable O Accounts Receivable O Cash (9) O O Accounts Payable O Accounts Receivable Assignment # 2-Phuong Ha O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold O Inventory O Sales Discounts 0 Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold O Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold 0 Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies 0 Cost of Goods Sold O Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold O Inventory O Sales Discounts O Sales Returns and Allowances O Sales Revenue O Selling Expenses O Supplies O Cost of Goods Sold 0 Inventory O Sales Discounts O Sales Revenue 0 Selling Expenses O Supplies O Cash O Sales Returns and Allowances (10) O O Cost of Goods Sold O Sales Revenue O Accounts Payable O Inventory O Selling Expenses O Accounts Receivable O Sales Discounts O Supplies 0 Cash 0 Sales Returns and Allowances (11) O O Cost of Goods Sold O Sales Revenue O Accounts Payable O Inventory 0 Accounts Receivable O Sales Discounts O Selling Expenses O Supplies O Cash O Sales Returns and Allowances ht'tpstlixlitem prod.pearsoncmg .comi'apilv'l lprintJhighered 11/15 11/16121, 8:20 PM (12) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (13) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (14) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (15) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (16) O 0 Accounts Payable 0 Accounts Receivable O Cash (17) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (18) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (19) O 0 Accounts Payable 0 Accounts Receivable 0 Cash (20) O 0 Accounts Payable 0 Accounts Receivable 0 Cash Assignment # 2-Phuong Ha 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory O Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances httpstlixlitem prodpearsoncmg .comr'apilv'l lprintJhighered 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue O Selling Expenses O Supplies 1215 11/16121, 8:20 PM (21) (22) (23) (24) (25) (26) (27) (28) (29) O 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash Assignment # 2-Phuong Ha 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances O Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory O Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances httpstlixlitem prodpearsoncmg .comr'apilv'l lprintJhighered 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue O Selling Expenses O Supplies 13/15 11/16121, 8:20 PM (30) (31) (32) (33) (34) (35) (36) (37) (38) O 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable O Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash 0 0 Accounts Payable 0 Accounts Receivable 0 Cash Assignment # 2-Phuong He 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts O Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory O Sales Discounts 0 Sales Returns and Allowances 0 Cost of Goods Sold 0 Inventory 0 Sales Discounts 0 Sales Returns and Allowances O Cost of Goods Sold O Inventory 0 Sales Discounts 0 Sales Returns and Allowances httpstlixlitem prodpearsoncmg .comr'apilv'l lprintJhighered 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies 0 Sales Revenue 0 Selling Expenses O Supplies O Sales Revenue O Selling Expenses O Supplies 14l15 11I1BI21, 8:21 PM ittssignmentiil 2-Phuong Ha Student: Phuong Ha Instructor: Suzanna Karam Singh Date: 11/16/21 Course: ACCT1036 (3) Assignment: Assignment # 2 1. The nancial records of Homeland Drawing and Home Plans show these data (in thousands): 1(Click the icon to View the income statements.) In early 2021, a potential investor's auditors discovered that the ending inventory of 2018 had been overstated by $7 thousand. Also, the ending inventory for 2020 had been understated by $9 thousand. The ending inventory at December 31, 2019, was correct. Required 1. Show corrected comparative income statements for the three years. 2. State whether each year's net income as reported here and the related owner's equity amounts are understated or overstated. For each incorrect gure, indicate the amount of the understatement or overstatement. Requirement 1. Show corrected comparative income statements for the three years. Complete the corrected comparative income statement: (Use a minus sign or parentheses for any losses.) Homeland Drawing and Home Plans Income Statements (thousands) For the Years Ended December 31, 2020, 2019, and 2018 Net sales revenue Cost of goods sold: Beginning inventory Net purchases Cost of goods available Less: Ending inventory Cost of goods sold Gross margin Operating expenses Net income Requirement 2. State whether each year's net income as reported here and the related owner's equity amounts are understated or overstated. For each incorrect gure, indicate the amount of the understatement or overstatement. State whether each year's net income before correction was overstated or understated and the amount of the misstatement. (If the net income was correct. leave the value cell blank.) Year: Prior to correction net income was 2020 |:| thousand. 2019 I: thousand- 2018 |:| thousand- State whether each year's owner's equity before correction was overstated, understated, or correct. If the owner's equity was overstated or understated, enter the amount. (If the owner's equity was correct, leave the value cell blank.) htlpstlixlitem prod.pearsoncmg .comi'apilv'i lprintJhighered H1 5 11l16n'21. 8:21 PM Assignment # 2-F'huong Ha Year: Prior to correction owner's equity was 2020 (4) I ) I:| thousand. 2019 (5 |:I thousand. 2013 (6) E thousand. 1: Income Statements Net sales revenue Cost of goods sold: Beginning inventory Net purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross margin Operating expenses Net income (1) O 0 correct 0 overstated by O understated by (5) O 0 correct 0 overstated by O understated by (2) O 0 correct 0 overstated by O understated by (5) O 0 correct O overstated by O understated by httpszlixlitem prod.pearsoncmg .coml'apilv'l [printlhighered (3) O 0 correct 0 overstated by O understated by (4) O 0 correct 0 overstated by O understated by 2115 11l16l21, 8:21 PM Assignmentsl 2-F'huong Ha 2. Hustle Supplies has a periodic inventory system and uses the gross margin method of estimating inventories for interim nancial statements. The business had the following account balances for the scal year ended May 31, 2020: 2(Click the icon to view the data.) Emmi Requirement 1. Use the gross margin method to estimate the cost of the business's ending inventory, assuming the business has an average gross margin rate of 40 percent. (Use parentheses or a minus sign when subtracting numbers. Round amounts to the nearest whole dollar.) Net purchases (4) Cost of goods available Estimated ending inventory Requirement 2. The business has done a physical count of the inventory on hand on May 31, 2020. For convenience, this inventory was calculated using the retail selling prices marked on the goods, which amounted to $280,000. Use the information from requirement 1 and the gross margin method to calculate the cost of the inventory counted. The cost of inventory counted is $ . (Round your answers to the nearest whole dollar.) 2: Data Inventory: June 1, 2019 $ 150,000 Purchases 1,350,000 Purchase returns and allowances 42,000 Freight-in 36,000 Sales 2,100,000 Sales returns and allowances 50,000 3: Required 1. Use the gross margin method to estimate the cost of the business's ending inventory, assuming the business has an average gross margin rate of 40 percent. 2. The business has done a physical count of the inventory on hand on May 31, 2020. For convenience, this inventory was calculated using the retail selling prices marked on the goods, which amounted to $280,000. Use the information from requirement 1 and the gross margin method to calculate the cost of the inventory counted. ht'tpstlixlitem prodpearsoncmg .comr'apilv't lprintJhighered 3l15 11l16l21. 8:21 PM Assignmential 2-Phuong Ha ( 1) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (2) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory O Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (3) O O Estimated cost of goods sold 0 Beginning inventory Ci Estimated ending inventory O Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (4) O 0 Estimated cost of goods sold 0 Beginning inventory 0 Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (5) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases httpsrlixlitem prodpearsoncmg .comr'apilv1 lprintjhighered 4l15 11l16l21. 8:21 PM Assignmential 2-Phuong Ha (6) O 0 Estimated cost of goods sold O Beginning inventory O Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% 0 Cost of goods sold: 0 Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases (T) O 0 Estimated cost of goods sold O Beginning inventory 0 Estimated ending inventory 0 Cost of goods available 0 Estimated gross margin of 40% O Cost of goods sold: O Freight-in 0 Less: Purchase returns and allowances 0 Net purchases 0 Net sales revenue 0 Purchases httpsn'ixlitem prod.pearsoncmg .comr'apilv'i lprintJhighered 5l15 11l16l21. 8:21 PM Assignmentsl 2-Phuong Ha 3. Suffolk IT Solutions uses a perpetual inventory system for the purchase and sale ofjump drive inventory and had the following information available on August 31. 2020: 4 (Click the icon to View the purchases and sales.) Equired5 Requirement 1a. Calculate the cost of goods sold for August under the movingweighted-average cost method. Then nd the total quantities and costs for purchases and cost of goods sold as well as the ending inventory on hand. (Round unit costs to the nearest cent. Round all other calculations to the nearest whole dollar.) Purchases Cost of Goods Sold Inventory on Hand Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Requirement 1b. Calculate the cost of goods sold and the cost of the ending inventory for August under the FIFO cost method. (Round unit costs to the nearest cent. Round all other calculations to the nearest whole dollar. Enter the oldest inventory layer rst.) httpszllxlitem prodpearsonomg .comi'apilv'i [printlhighered 6l15 11l16l21. 8:21 PM Assignment#2Phuong Ha Purchases Cost of Goods Sold Inventory on Hand Unit Cost Total Cost Unit Cost Total Cost \"mm UJMJE H mm MU U] U HUME M U] Requirement 2. Prepare the journal entries required to record the transactions using the perpetual inventory system with FIFO costing. Assume all purchases and sales are made on account. (Record debits first, then credits. No explanations are required. Round amounts to the nearest whole dollar.) U D August 7: Purchased 2,400 units at $16 per unit. Journal Entry August 8: Sold 1,760 units at $24 per unit. First record the sale on August 8. Journal Entry httpszlixlitem prod.pearsoncmg .comr'apilv'i [printlhighered 7M 5 11l16l21. 8:21 PM Assignment#2Phuong Ha Now record the cost of the inventory that was sold on August 8. Journal Entry August 12: Purchased 1,590 units at $17 per unit. Journal Entry August 16: Sold 2,560 units at $25 per unit. First record the sale on August 16. Journal Entry Now record the cost of the inventory that was sold on August '16. Journal Entry August 21: Purchased 1,860 units at $19 per unit. Journal Entry httpszlixlitem prod.pearsoncmg .comi'apilv1 [printlhighered Bl15 11l16l21. 8:21 PM Assignmentsl 2-F'huong Ha August 25: Purchased 2,640 units at $21 per unit. Journal Entry August 29: Sold 3,450 units at $26 per unit. First record the sale on August 29. Journal Entry Now record the cost of the inventory that was sold on August 29. Journal Entry Requirement 3. An internal audit has discovered that two new employeesan accounting clerk and an employee from the purchasing departmenthave been stealing merchandise and covering up the shortage by changing the inventory records. The external auditors examined the accounting records prior to the employment of the two individuals and noted that the company has an average gross margin rate of 27 percent. Use the gross margin method to estimate the cost of the inventory shortage (under the FIFO costing method). (Note: The physical count matched the estimate.) Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. Complete the table provided below. Total cost of goods available for sale Less: Estimated cost of goods sold Estimated merchandise inventoryAug. 31 :| Inventory FIFO balanceAug. 31 Estimated inventory shortage Explain the difference between the three inventory valuesthe accounting records, physical count, and estimatesand their importance in valuing inventory. 0 A. The inventory from the physical count and the accounting records are the same, but the httpsjixlitem prod.pearsoncmg .comi'apilv'i [printlhighered 9l15 11l16l21, 8:21 PM Assignmentsl 2-Phuong Ha inventory from the estimate is different due to the accounting clerk stealing the merchandise. Only the accounting records of the inventory are used on the nancial statements. O B. The inventory from the physical count and the estimates are the same, but the inventory from the accounting records is different due to the accounting clerk changing the records. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 0 C. The inventory from the physical count and the accounting records are the same, but the inventory from the estimate is different due to the accounting clerk changing the records. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 0 D. The inventory from the physical count and the estimates are the same, but the inventory from the accounting records is different due to the accounting clerk changing the records. Only the physical count of the inventory is used on the nancial statements. 0 E. The inventory from the estimate and the accounting records are the same, but the inventory from the physical count is different due to the accounting clerk stealing the merchandise. All three amounts are important with verifying the value of inventory that is disclosed on the nancial statements. 4: Purchases and Sales Purchases and Sales Number of Units Aug.