In: Accounting
Effect of Errors in Physical Inventory
Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $507,150 instead of the correct amount of $522,360.
Enter all amounts as positive numbers.
a. State the effect of the error on the December 31, 20Y2, balance sheet of Missouri River Supply.
Balance Sheet Items | Understated/Overstated | Amount |
Merchandise Inventory | $fill in the blank 2 | |
Current Assets | fill in the blank 4 | |
Total Assets | fill in the blank 6 | |
Owner's Equity | fill in the blank 8 |
b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 20Y2.
Income Statement Items | Overstated/Understated | Amount |
Cost of Merchandise Sold | $fill in the blank 10 | |
Gross Profit | fill in the blank 12 | |
Net Income | fill in the blank 14 |
c. If uncorrected, what would be the effect of the error on the 20Y3 income statement?
Income Statement Items | Overstated/Understated | Amount |
Cost of Merchandise Sold | $fill in the blank 16 | |
Gross Profit | fill in the blank 18 | |
Net Income | fill in the blank 20 |
d. If uncorrected, what would be the effect of the error on the December 31, 20Y3, balance sheet?