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Incorrect Inventory Correct Inventory Amount Amount

This document contains multiple worksheets and exercises related to accounting transactions and financial statements for various companies and time periods. It provides sales, cost of goods sold, inventory, expense and income statement data and asks the reader to make corrections based on identified inventory errors and recalculate financial results.

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Abdii Dhufeera
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2K views3 pages

Incorrect Inventory Correct Inventory Amount Amount

This document contains multiple worksheets and exercises related to accounting transactions and financial statements for various companies and time periods. It provides sales, cost of goods sold, inventory, expense and income statement data and asks the reader to make corrections based on identified inventory errors and recalculate financial results.

Uploaded by

Abdii Dhufeera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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WORKSHEET

1. Abera Company reported annual net income as follows


2000

Br. 151,400

2001

152,400

2002

128,120

Analysis of its inventories shows that the following incorrect inventory amounts were used (the
correct amounts are also shown)
Incorrect inventory
Amount

Correct inventory
Amount

December 31,2001

Br. 24,000

Br. 28,000

December 31,2001

27,000

23,000

Compute the annual net income for each of the three years assuming the correct inventories had
been used.
2. Condensed income statement for FANTU Supermarket for two years are shown below:
19 x 4
Sales (net)

Br. 126,000

Cost of Goods Sold


Gross Margin

Br. 105,000

75,000
Br. 51,000

Operating Expenses
Net Income

19 x 3
54,000
Br. 51,000

30,000
Br. 21,000

30,000
Br. 21,000

After the end of 19 x 4 it was discovered that an error had resulted in a Br. 9000 understatement
of 19 x 3 ending inventory.
Required: Compute
a)

the corrected net income for 19 x 3

b)

the corrected cost of goods sold for 19 x 4

c)

the corrected net income for 19 x 4

d)

What effect will the error have on net income and ending owners equity for 19 x
5?

3. MAMO Co. engaged in the following transactions in Megabit 1995:


Megabit 1- Sold merchandise to Belew Co. on credit, terms n/30, FOB shipping point, Br.
2100 (cost br. 1260)
3 Purchased merchandise on credit from Semi Co., terms n/30, FOB shipping
point, Br. 3800
5 Paid Express Transit for freight charges on merchandise received, Br. 290
6 Purchased store supplies on credit from Hadiya Trading, terms n/20, Br. 636
8 Purchase merchandise on credit from Semi Co., terms n/30, FOB shipping
point, Br. 3600, which includes Br. 200 freight costs paid by Semi Co.
12 Returned some of the merchandise received on Megabit 3 for credit, Br. 600
Megabit 15 Sold merchandise on credit to MERON Trading, terms n/30, FOB shipping point,
Br. 1200 (cost Br. 720)
16 Returned some of the store supplies purchased in Megabit 6 for credit, Br. 200
17 Sold merchandise for cash Br. 1000 (cost, Br. 600)
18 Accepted for full credit a return from Belew Company and returned merchandised
to inventory, Br. 200 (Cost Br. 120)
24 Paid Semi Company for purchase of Megabit 3 loss return of Megabit 12
25 Received full payment from Belew Company for his Megabit 1 purchase less the
return on Megabit 18
Required:
1.

Prepare general journal entries to record the transactions, assuming use of the periodic
inventory system.

2.

Prepare general journal entries to record the transactions, assuming use of the periodic
inventory system.

3.

Compute the cost of goods sold and net sales during Megabit.

4.

Compute the Gross Profit on sale for the month of Megabit.

5.

Refer to the following exercise in order to answer questions a f.

The following information is related to the business for three consecutive fiscal years.
19 x 3
Net sales

19 x 2

19 x 1

Br. 430,000

Br. 425,000

Br. 400,000

Cost of goods sold

240,000

243,000

240,000

Gross Profit

189,200

182,000

160,000

96,800

92,400

86,500

Operating Expenses

Assume that you have found everything in order except for the following:
i.

The ending inventory was understated by Br. 15,000 and Br. 3000 at the end of 19 x 1
and 19 x 2 respectively.
ii.

The ending inventory was overstated by Br. 20,200 at the end of 19 x 3

The business enterprise uses the periodic inventory system and the above errors had not been
brought to attention prior to your investigation.
a.

What was the correct amount of cost of goods sold for 19 x 1?

b.

What was the correct amount of cost of goods sold for 19 x 2?

c.

What was the correct amount of cost of goods sold for 19 x 3?

d.

What was the correct amount of Net income for 19 x 2?

e.

What was the correct amount of Net income for 19 x 3?

f.

Compute the correct gross profit percentage for 19 x 1?

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