Question
Tarawa Incorporated made the following errors when counting inventory on December 31, 2021, December 31, 2022, and December 31, 2023: Inventory on December 31, 2021
Tarawa Incorporated made the following errors when counting inventory on December 31, 2021, December 31, 2022, and December 31, 2023: |
Inventory on December 31, 2021 was understated by $655,000 |
Inventory on December 31, 2022 was overstated by $15,000 |
Inventory on December 31, 2023 was overstated by $35,000 |
Given the errors above, determine whether the items below are a) correct, overstated or understated and b) by what amount. |
1) Effect on net income for the year ended December 31, 2021. |
2) Effect on cost of goods sold for the year ended December 31, 2022. |
3) Effect on retained earnings as of December 31, 2023. |
4) Effect on beginning inventory on January 1, 2024. |
Effect (i.e., overstated, understated, no error) Amount of error, if any Item # 1) Net income for the year ended 12/31/21 2) CGS for the year ended 12/31/22 3) Retained earnings on 12/31/23 4) Beginning inventory on 1/1/24
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