Question
During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: 2019 understated by $ 152,000
During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:
| 2019 | understated by | $ | 152,000 | |
| 2020 | overstated by | 214,000 | ||
WMC uses the periodic inventory system and the FIFO cost method. Required: 1-a. Determine the effect of 2019 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 1-b. Determine the effect of 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the error in 2021. 3. Will WMC account for the error (a) retrospectively or (b) prospectively?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Government Audit An Effective Tool For The Anti Corruption Struggle In The New Era Of Chinas Governance
Authors: Bowen Zou, Yanzhe Dr. Zhang, Yang Dr. ZHAO, Jian Dr. Zhang
1st Edition
1844646068, 978-1844646067
