Exercise 6-50 Effects of an Error in Ending Inventory During 2012, Waymire\'s ac
ID: 2393213 • Letter: E
Question
Exercise 6-50
Effects of an Error in Ending Inventory
During 2012, Waymire's accountant discovered that ending inventory for 2010 had been overstated by $8,200.
1. Prepare corrected income statements for 2011 and 2010. Use minus for negative values. Enter expenses as positive amounts.
2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item. Indicate whether each error is an overstatement (+) or an understatement (-). If no entry is required, leave the amount box blank.
2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item. Indicate whether each error is an overstatement (+) or an understatement (-). If no entry is required, leave the amount box blank.
Explanation / Answer
Solution 1:
Solution 2:
Corrected income statement - Waymire Company Particulars 2011 2010 Details Amount Details Amount Sales Revenue $538,200.00 $483,700.00 Cost of goods sold: Beginning inventory $31,100.00 $32,100.00 Purchases $343,200.00 $292,700.00 Cost of goods available for sale $374,300.00 $324,800.00 Ending inventory $46,800.00 $327,500.00 $31,100.00 $293,700.00 Gross Margin $210,700.00 $190,000.00 Operating Expenses $167,200.00 $151,600.00 Income before taxes $43,500.00 $38,400.00