Errect of Errors in Pnysical Inventory Hydro White Water Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2014, Hydro White Water incorrectly counted its inventory as $393,890 instead of the correct amount of $405,710. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 2014, balance sheet of Hydro White Water. Balance Sheet Items Understated/Overstated Amount Merchandise Inventory Understated 11,840 x Current Assets Understated $ Total Assets Understated $ Owner's Equity Understated b. State the effect of the error on the income statement of Hydro White Water for the year ended December 31, 2014. Income Statement Items Overstated/Understated Amount Cost of Merchandise Sold Overstated $ Gross Profit Understated $ Net Income Understated $ c. If uncorrected, what would be the effect of the error on the 2015 income statement? Income Statement Items Overstated / Understated Amount Cost of Merchandise Sold Understated $ Gross Profit Overstated $ Net Income Overstated $ Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $810,000; Allowance for Doubtful Accounts has a credit balance of $7,500; and sales for the year total $3,650,000. Bad debt expense is estimated at 1.25% of sales. 1. Determine the amount of the adjusting entry for uncollectible accounts. $ 2,362,50 X 2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ 27,000 X Allowance for Doubtful Accounts $ 24,650 X Bad Debt Expense $ 17,650 X 3. Determine the net realizable value of accounts receivable. $ 760,350 X Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $420,000; Allowance for Doubtful Accounts has a credit balance of $4,000; and sales for the year total $1,890,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $16,000. a. Determine the amount of the adjusting entry for uncollectible accounts. $ 39,700 X b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Feedback