Question
Sparky, Inc. follows a calendar-year end. Its financial statements for the years 2017 and 2016 contained errors as follows: Ending Inventory for 2016 was overstated
Sparky, Inc. follows a calendar-year end. Its financial statements for the years 2017 and 2016 contained errors as follows:
Ending Inventory for 2016 was overstated by $8,000
Ending Inventory for 2017 was overstated by $3,000
No correcting entries were made at December 31, 2017. Determine the following:
a. Indicate the effect on 2017 Net Income (ignore taxes. Indicate O for Overstated; U for Understated; or NE for No Error. If your answer is overstated by $4,000, record your answer as O4000.)
b. Indicate the effect on 2017 Ending Retained Earnings (enter your answer same as above).
| Effect on 2017 Net Income | Effect on Ending Retained Earnings at December 31, 2017 |
| $ | $
|
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The Internal Auditing Handbook
Authors: K. H. Spencer Pickett
2nd Edition
0470848634, 978-0470848630
