Question
Exercise 20-19 (Algo) Error correction; inventory error [LO20-6] During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by
Exercise 20-19 (Algo) Error correction; inventory error [LO20-6]
During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:
| 2019 | understated by | $ | 122,000 | |
| 2020 | overstated by | 154,000 | ||
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?
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Harold Cecil Edey A Collection Of Unpublished Material From A 20th Century Accounting Reformer
Authors: Martin E. Persson
1st Edition
1789736706, 9781789736700
