Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors:
Navajo Company's year-end financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is understated by $69,000 and Year 2 ending inventory is overstated by $39,000. For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Year 1 $ 744,000 287,000 1,266,000 1,406,000 Year 2 $ 974,000 294,000 1,379,000 1,599.000 Year 3 $ 809,000 $ 269,000 1,249,000 1,264,000 Required: 1. For each key financial statement figure(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show correct the reported amounts. (Amounts to be deducted must be entered with a minus sign.) Year 1 Year 2 Year 3 Cost of goods sold: Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Net income: Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Total current assets: Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Equity: Reported amount Adjustment for 12/31/Year 1 error Adjustment for 12/31/Year 2 error Corrected amount Required: 1. For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? Complete this question by entering your answers in the tabs below. Required 1 Required 2 What is the total error in combined net income for the three-year period resulting from the inventory errors? Error in total net income of three years
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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