Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The income statements of Diamond Company for the years ended December 31, 19X1, and 19X2 follow. 19X1 19X2 Net sales $440,000 $483,00 Cost of goods

The income statements of Diamond Company for the years ended December 31, 19X1, and 19X2 follow. 19X1 19X2 Net sales $440,000 $483,00 Cost of goods sold 0 Beginning inventory $ 95,000 $109,000 Add: Net purchases 380,000 404,000 Goods available for sale $475,000 $513,000 Less: Ending inventory 109,000 127,000 Cost of goods sold 366,000 386,000 Gross profit $ 74,000 $ 97,000 Operating expenses 58,000 67,000 Net income $ 16,000 $ 30,000Diamond uses a periodic inventory system. A detailed review of the accounting records disclosed thefollowing: a. A review of 19X1 purchase invoices revealed that a clerk had incorrectly recorded a $12,600 purchase as $1,260. b. A $4,800 purchase was made on December 30, 19X2, terms F.O.B. shipping point. The invoice was not recorded in 19X2 nor were the goods included in the 19X2 ending physical inventory count. Both the goods and invoice were received in early 19X3, with the invoice being recorded at that time. c. Goods costing $3,000 were accidentally excluded from the 19X1 ending physical inventory count. These goods were sold during 19X2, and all aspects of the sale were properly recorded. Instructions: Prepare corrected income statements for 19X1 and 19X2. Determine the impact of the preceding errors on the December 31, 19X2, owners equity balance

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_2

Step: 3

blur-text-image_step3

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

More Books

Students also viewed these Accounting questions

Question

=+4 Given Max Wilsons comments, what should Lyle Hayes do?

Answered: 1 week ago