Question

During the taking of its physical inventory on December 31, Almond upplies Company incorrectly counted its inventory as $545,000 instead of the correct amount of $554,000. Indicate the balance sheet effects of the error on inventory, current assets, total assets and stockholders uity, Nisa indicate the income statement effects of the error on cost of goods sold, gross profit, and net income. For those boxes in which you must enter understatements or negative numbers na minus sign Amount of Misstatement Overstated or Understated Balance Sheet Inventory Current assets Total assets Stockholders' equity Income Statement: Cost of goods sold Gross profit Net income

Answer 1

Amount of Overstated or Misstatement Understated Answer Balance Sheet: Inventory Current Assets Total Assets Shareholder's Equity ($9,000) ($9,000) ($9,000) ($9,000) Understated Understated Understated Understated Income Statement: Cost of Goods Sold Gross Profit Net Income $9,000 ($9,000) ($9,000) Overstated Understated Understated