Merchandising Activities Chapter 6 Queen Company is a furniture wholesaler. Queen hired a new accounting clerk Problem 6.6B Correcting Errors-Reco on 1 January of the current year. The new clerk does not understand accrual accounting and of Merchandising Trans: recorded the transactions below based on when cash receipts and disbursements changed hands LO2, LO3, LOG rather than when the transaction occurred. Queen uses a perpetual inventory system, and its accounting policy calls for inventory purchases to be recorded net of any discounts offered. Paid Hardwoods Forever Company $49,000 for furniture that it received on 20 December. (This purchase was recorded as a debit to Inventory and a credit to Accounts Payable on 20 December of last year, but the accounting clerk ignores that fact.) Received furniture from N&W Co. for $100,000; terms 2/10, 1/30. Sold furniture to Beige Chipmunk Co. for $150,000; terms 1/10, 1/30. The cost of the furniture to Queen was $122,500. 7 Jan. 23 Dec. 26 Dec. Instructions a. As a result of the accounting clerk's errors, compute the amount by which the following accounts are overstated or understated: 1. Accounts Receivable 2. Inventory 3. Accounts Payable 4. Sales 5. Cost of Goods Sold b. Compute the amount by which profit is overstated or understated. Prepare a single journal entry to correct the errors that the accounting clerk has made. (Assume that Queen has yet to close its books for the current year.) Assume that Queen has already closed its books for the current year. Make a single journal entry to correct the errors that the accounting clerk has made. Assume that the ending inventory balance is correctly stated based on adjustments result- ing from a physical inventory count. (Cost of Goods Sold was debited or credited based on the inventory adjustment.) Assume that Queen has already closed its books for the current year. Make a single journal entry to correct the errors that the accounting clerk has made. c. d. e. Accrual Accoun Flow, and Fair L01, L03, LOG Problem 6.7B Computer Resources Company is a computer retailer. Computer Resources began operations in December of the current year and engaged in the following transactions during that month. Computer Resources uses a perpetual inventory system. 5 Dec. Purchased $100,000 of computer equipment, terms n/30. 12 Dec. Sold $100,000 of computer equipment, terms n/30. The cost of the equipment sold is $50,000. 26 Dec. Purchased $200,000 of computer equipment, terms n/30. Instructions a. Compute the gross profit on Computer Resources's transactions during December. b. Compute the gross profit on Computer Resources's transactions during December if a cash- basis accounting system was used. c. Explain the difference between the results in a and b