1-AThe following income statement was prepared for Frame Supplies for Year 1.

FRAME SUPPLIES
Income Statement
For the Year Ended December 31, Year 1
Sales	$ 70,700
Cost of goods sold	(31,140)
Gross margin	39,560
Operating expenses	(8,615)
Net income	$ 30,945

During the year-end audit, the following errors were discovered:

A $1,806 payment for repairs was erroneously charged to the Cost of Goods Sold account. (Assume that the perpetual inventory system is used.)

Sales to customers for $2,585 at December 31, Year 1, were not recorded in the books for Year 1. Also, the $1,560 cost of goods sold was not recorded.

A mathematical error was made in determining ending inventory. Ending inventory was understated by $959. (The Inventory account was mistakenly written down to the Cost of Goods Sold account.)

Required Determine the effect, if any, of each of the errors on the following items. Give the dollar amount of the effect and whether it would overstate (O), understate (U), or not affect (leave blank) the account. The first item for each error is recorded as an example.

Give the dollar amount of the effect and state whether a mathematical error made in determining ending inventory that understated ending inventory by $959 would overstate (O), understate (U), or not affect (leave blank) the account. The first item of the error is recorded as an example. (Input the amount as a positive value.) PROBLEM 5-20A

1-B

The following accounting information pertains to two grocery store chains. One grocery store chain has a market strategy of selling only high-end organic food products while the other grocery store sells less expensive foods that are traditionally grown with the use of pesticides, synthetic fertilizers, and/or genetically modified organisms. The company selling traditional produced foods has an average inventory balance of $45,000, while the company selling organic foods has an average inventory balance of $40,000. Required a. Complete the table by filling in the missing amounts. b. Which grocery store chain is taking a lower cost/higher volume strategy as it relates to sales? c1. Calculate the inventory turnover and average days to sell inventory for each grocery store chain. c2. Based on your calculations, which grocery chain will be required to reorder inventory more frequently?

\begin{tabular}{|l|l|l|} \hline \multicolumn{1}{|c|}{ Error No. 1 } & AmountofError & \multicolumn{1}{|c|}{ Effect } \\ \hline Sales, Year 1 & & \\ \hline Ending inventory, December 31, Year 1 & & \\ \hline Gross margin, Year 1 & & \\ \hline Beginning inventory, January 1, Year 2 & & \\ \hline Cost of goods sold, Year 1 & & \\ \hline Net income, Year 1 & & \\ \hline Retained earnings, December 31, Year 1 & & \\ \hline Total assets, December 31, Year 1 & & \\ \hline \end{tabular} \begin{tabular}{|l|c|c|} \hline \multicolumn{1}{|c|}{ Error No. 2 } & AmountofError & Effect \\ \hline Sales, Year 1 & $ & \\ \hline Ending inventory, December 31, Year 1 & & \\ \hline Gross margin, Year 1 & & \\ \hline Beginning inventory, January 1, Year 2 & & \\ \hline Cost of goods sold, Year 1 & & \\ \hline Net income, Year 1 & & \\ \hline Retained earnings, December 31, Year 1 & & \\ \hline Total assets, December 31, Year 1 & & \\ \hline \end{tabular} Complete the table by filling in the missing amounts. Which grocery store chain is taking a lower cost/higher volume strategy as it relates to sales? ower cost / higher volume strategy Calculate the inventory turnover and average days to sell inventory for each grocery store chain. (Use 365 days in a year. Round your "Inventory Turnover Ratios" to 1 decimal place and all other answers to the nearest whole number.) Complete this question by entering your answers in the tabs below. Which grocery chain will be required to reorder inventory more frequently