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Lena [83]
3 years ago
7

You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2018, you discover the f

ollowing errors related to the 2016 and 2017 financial statements: Inventory at 12/31/16 was understated by $6,800. Inventory at 12/31/17 was overstated by $9,800. On 12/31/17, inventory was purchased for $3,800. The company did not record the purchase until the inventory was paid for early in 2018. At that time, the purchase was recorded by a debit to purchases and a credit to cash. The company uses a periodic inventory system. Required: 1. Assuming that the errors were discovered after the 2017 financial statements were issued, analyze the effect of the errors on 2017 and 2016 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.

Business
1 answer:
miv72 [106K]3 years ago
6 0

Answer

The answer and procedures of the exercise are attached in the following image.

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.  

You might be interested in
Horton Company purchased a building on January 2 by signing a long-term $480,000 mortgage with monthly payments of $4,500. The m
Ganezh [65]

Answer:

$479,500

Explanation:

To determine the interest due for the first payment we can solve the following:

interest due on payment 1 = total debt x interest rate x 1/12 = $480,000 x 10% x 1/12 = $4,000

Now we need to subtract the interest due from the first payment:

principal paid = payment - interest due = $4,500 - $4,000 = $500

remaining principal = $480,000 - $500 =  $479,500

8 0
3 years ago
Statement of cash flows
likoan [24]

Answer:

a.

Palmetto Statement of Cashflows      

<u>For the Year Ended December 31, 2013 </u>    

   

Cashflow from Operating Activities    

Net Cashflow from Operaing Activities     $15,600

   

Cashflow from Investing Activities    

Net Cashflow from Investing Activities     ($23,000)

   

Cashflow from Financing Activities    

Net Cashflow from Financing Activities     ($4,500)

   

Net Increase (Decrease)    <u>($11,900)</u>

   

Add: Beginning of Period Cash balance    $32,000

   

Ending Cash Balance    <u>$20,100</u>

b. Operating Cash flow relates to the normal business operations of the business. A Net Cash Inflow from this therefore means that the business made a profit from its normal operations of selling fast food during 2013.

c. Investing Activities relate to transaction involving Fixed Assets as well as the stocks and bonds of other companies. The Net Cash flow was probably caused by Palmetto buying more Fixed Assets than they disposed of in the year 2013.

d. Financing activities relate to how the business is financed in terms of Equity and debt. The payments of Dividends therefore fall under here as they relate to Equity. A net cash outflow here therefore probably means that Palmetto paid out dividends to shareholders. They might have also repaid some loans but judging by how small the outflow is, the loans were either small or it was only dividends that were paid out.

4 0
3 years ago
Gekko, Inc. reported the following balances (after adjustment) at the end of 2008 and 2007.
nevsk [136]

Answer:

Correct answer is D, P3,900

Explanation:

Begging Allowance for doubtful account is P1,500 (96,000 - 94,500). Ending balance of Allowance for doubtful account is P3,000 (P108,000 -P105,000). We can now work back the provision for doubtful accounts that the company has made during 2008.

Beginning P1,500

Add:

Collection of written off accounts 800

Total P2,300

Less:

Written off 3,200

Total (P900)

Therefore, in order for the company to have an ending inventory of P3,000, They must have set up a provision for doubtful accounts in the amount of P3,900. Attached herewith is the T-account of allowance for doubtful accounts

6 0
3 years ago
Imagine you are making a $1000 purchase with different payment options. Which of the following
Tomtit [17]

The payment option that pays the LEAST is <u>B. B. 10% APR, with 12 monthly payments,</u> as it pays back a total of $1,008.33, for borrowing $1,000.

<h3>How to calculate payment options:</h3>

Payment options can be computed using an online finance calculator as follows:

The option that pays the least total cost should be chosen.

<h3>Data and Calculations:</h3>

Loan payment = $1,000

A. 8% APR, no payments for the first 6 months, then 6 monthly payments:

Amount after 6 months = $1,040 ($1,000 + $1,000 x 0.08 x 1/2)

N (# of periods) = 1

I/Y (Interest per year) = 8%

PV (Present Value) = $1,040

FV (Future Value) = $0

<u>Results:</u>

PMT = $174.49

Sum of all periodic payments = $1,046.93 ($174.49 x 6)

Total Interest =$46.93 ($40 + $6.93)

B. 10% APR, with 12 monthly payments:

N (# of periods) = 1

I/Y (Interest per year) = 10%

PV (Present Value) = $1,000

FV (Future Value) = $0

<u>Results:</u>

PMT = $84.03

Sum of all periodic payments = $1,008.33

Total Interest = $8.33

C. 12% APR, with 6 monthly payments:

N (# of periods) = 1

I/Y (Interest per year) = 12%

PV (Present Value) = $1,000

FV (Future Value) = $0

<u>Results:</u>

PMT = $168.33

Sum of all periodic payments = $1,010.00

Total Interest $10.00

Thus, the payment option that pays the LEAST is <u>Option B</u>.

Learn more about periodic payments at brainly.com/question/24244579

4 0
2 years ago
If the domestic demand curve is Equal 20p Superscript negative 0.5​, the domestic supply curve is Equal 5p Superscript 0.5​, and
pishuonlain [190]

Answer:

$52

$ 1.33

  • consumer price will increase
  • consumer surplus will decrease
  • import will decrease
  • reduced export
  • portends gloom for the general outlook for the economy

Explanation:

Given domestic demand curve, S(p) = 20p⁻⁰°⁵

the domestic supply curve S(p)= 5p⁰°⁵

world price is ​$7.00

using  calculus to determine the changes in consumer​ surplus

by consumer surplus means in this case supply exceeds demand

we establish the equilibrium point where the supply and demand functions meet or are equal

solving 20p⁻⁰°⁵ = 5p⁰°⁵

     20/5 = p⁰°⁵/p⁻⁰°⁵

       4 = p⁰°⁵⁺⁰°⁵

      4= p = q which is the quantity produced

     

consumer surplus =  maximum price willing to pay - Actual price

                             = ∫⁴₀  dp dp - p* q

                               =  ∫⁴₀20p⁻⁰°⁵ dp- 7* 4

                              = 20∫⁴₀p⁻⁰°⁵ dp -28

                              = 20/0.5 p⁰°⁵- 28

                              = 40 *4⁰°⁵ - 28 =  $52

producer surplus = it is a measure of producer welfare. It is measured as the difference between what producers are willing and able to supply a good for and the price they actually receive

thus  producer  surplus = p* q - ∫⁴₀  d(s) dp

                                         = 7 * 4 - ∫⁴₀  5p⁰°⁵  dp

                                         = 28 - 5 ∫⁴₀   p⁰°⁵    dp

                                         = 28 -5 *2/3  p¹°⁵  

                                          = 28 -5 *2/3  4¹°⁵

                                          =$ 1.33

welfare from eliminating free trade

  • consumer price will increase
  • consumer surplus will decrease
  • import will decrease
  • reduced exports
  • portends gloom for the general outlook for the economy

5 0
3 years ago
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