At December 3 1 , 2 0 2 4 , Sharon Lee Corporation reported current assets of $ 3 4 4 , 0 5 0 and current liabilities of $ 1 9 6 , 6 0 0 The following items may have been recorded incorrectly Lee uses a perpetual inventory system Goods purchased costing $ 2 0 , 4 4 0 were shipped f o b shipping point by a supplier on December 2 8 Lee received and recorded the invoice on December 2 9 , 2 0 2 4 , but the goods were not included in Lee's inventory because they were not received until January 4 , 2 0 2 5 Goods purchased costing $ 1 5 , 9 5 0 were shipped f o b destination by a supplier on December 2 6 Lee received and recorded the invoice on December 3 1 , but the goods were not included in Lee's 2 0 2 4 inventory because they were not received until January 2 , 2 0 2 5 Goods held on consignment from Claudia Kishi Company were included in Lee's December 3 1 , 2 0 2 4 , inventory at $ 1 1 , 8 9 0 by what amount will income ( before taxes ) be adjusted up or down as a result of the corrections IMPORTANT I specifically want to know how the second adjustment affects net income If we are using a perpetual inventory system, wouldnt an increase to purchases just be a debit to inventory If inventory is a current asset, how does it affect net income Thank you ) upvotes in your future

Question

At December 3 1 , 2 0 2 4 , Sharon Lee Corporation reported current assets of $ 3 4 4 , 0 5 0 and current liabilities of $ 1 9 6 , 6 0 0   The following items may have been recorded incorrectly  Lee uses a perpetual inventory system  Goods purchased costing $ 2 0 , 4 4 0 were shipped f   o   b   shipping point by a supplier on December 2 8   Lee received and recorded the invoice on December 2 9 , 2 0 2 4 , but the goods were not included in Lee's inventory because they were not received until January 4 , 2 0 2 5   Goods purchased costing $ 1 5 , 9 5 0 were shipped f   o   b   destination by a supplier on December 2 6   Lee received and recorded the invoice on December 3 1 , but the goods were not included in Lee's 2 0 2 4 inventory because they were not received until January 2 , 2 0 2 5   Goods held on consignment from Claudia Kishi Company were included in Lee's December 3 1 , 2 0 2 4 , inventory at $ 1 1 , 8 9 0   by what amount will income ( before taxes ) be adjusted up or down as a result of the corrections  IMPORTANT   I specifically want to know how the second adjustment affects net income  If we are using a perpetual inventory system, wouldnt an increase to purchases just be a debit to inventory  If inventory is a current asset, how does it affect net income  Thank you  ) upvotes in your future

Accepted Answer

The Answer is in the image, click to view ...

Question

At December 3 1 , 2 0 2 4 , Sharon Lee Corporation reported current assets of $ 3 4 4 , 0 5 0

Step by Step Solution

Step: 1

Get Instant Access to Expert-Tailored Solutions

Step: 2

Step: 3

Ace Your Homework with AI

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Students also viewed these Accounting questions

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question

Question