Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

2. Did the error affect the cumulative net earnings for the four-year period? 0 Not affected 0 Affected 3. What effect did the error have


 image text in transcribed

2. Did the error affect the cumulative net earnings for the four-year period? 0 Not affected 0 Affected 3.
What effect did the error have on the income tax expense for 2022 and 2023? (Do not round
intermediate calculations. Round the final answers to the nearest dollar amount.)

 image text in transcribed

The statements of earnings for Pruitt Company summarized for a four-year period show the following (amounts in thousands of dollars): 2024 2023 2022 2021 Sales revenue $3,625 $4,050 $4,300 $4,575 Cost of sales 2,305 2,427 2,582 2,913 Gross profit 1,320 1,623 1,718 1,662 Operating expenses 650 673 698 702 Pretax earnings 670 950 1,020 960 Income tax expense (30%) 201 285 306 288 Net earnings $ 469 $ 665 $ 714 $ 572 An audit revealed that in determining these amounts, the ending inventory for 2022 was understated by $54. Required: 1. Revise these statements of earnings to reflect the correct amounts. (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Cost of sales Gross profit Sales revenue

2. Compute the gross profit for the first six months of the current year by using the FIFO costing method. (Do not round intermediate calculations and round the final answer to 2 decimal places.) Gross profit 3. Would the gross profit be higher, lower, or the same if Neverstop used the weighted-average costing method rather than the FIFO method? O Remain the same O Lower O Higher 4. Prepare journal entries to record the purchase and sale transactions, as well as the cost of sales, assuming that all sales and purchase transactions are on account and that the weighted-average method is used. (Do not round intermediate calculations and round the final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert Libby, Patricia Libby, Daniel Short, George Kanaan, M

5th Canadian edition

9781259105692, 978-1259103285

More Books

Students also viewed these Finance questions

Question

Roughly, what is the allocation of an HMO premium dollar?

Answered: 1 week ago

Question

Copy and complete the statement. 3800 m ? km =

Answered: 1 week ago