81) Understating ending inventory in the current period will understate cost of goods sold in the following period.
82) Determine the effect on cost of goods sold, total assets, and gross margin for 2010 and 2011 if the following inventory errors are not corrected. Indicate your answer with (+) for overstated, (-) for understated, and (0) for no effect.
a.Beginning inventory for 2010 is understated
b.Beginning inventory for 2010 is overstated
c.Ending inventory for 2010 is understated
d.Ending inventory for 2010 is overstated
Effect in 2010 on
Cost of Goods SoldTotal AssetsGross Margin
a.
b.
c.
d.
Effect in 2011 on
Cost of Goods SoldTotal AssetsGross Margin
a.
b.
c.
d.
83) The following data pertain to Home Office Company for the year ended December 31, 2011:
Sales (25% were cash sales) during the year$1,100,600
Cost of goods sold during the year690,300
Beginning inventory319,800
Purchases (10% were cash purchases) during the year738,200
a.Prepare journal entries to record sales, cost of goods sold, and the purchase of inventory during 2011 using the perpetual inventory system.
b.Compute the balance in the inventory account on December 31, 2011.
84) The following data pertain to Stainless Steel Enterprises for the year ended December 31, 2010:
Beginning inventory$188,200
Purchases on credit during the year400,500
Cost of goods sold during the year500,600
Sales (70% on credit) during the year755,400
a.Prepare entries to record the purchase of inventory, cost of goods sold, and sales during 2010 using the perpetual inventory system.
b.Compute the balance in the inventory account on December 31, 2010.