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Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta
Edition 22ISBN: 978-0077862275Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta
Edition 22ISBN: 978-0077862275 Exercise 9
Hallam Company's financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Inventory on December 31, 2014, is overstated by $18,000, and inventory on December 31, 2015, is understated by $26,000.
Required
1. For each key financial statement figure-( a ), ( b ), ( c ), and ( d ) above-prepare a table similar to the following to show the adjustments necessary to correct the reported amounts.
Analysis Component
2. What is the error in total net income for the combined three-year period resulting from the inventory errors Explain.
3. Explain why the overstatement of inventory by $18,000 at the end of 2014 results in an overstatement of equity by the same amount in that year.
Required
1. For each key financial statement figure-( a ), ( b ), ( c ), and ( d ) above-prepare a table similar to the following to show the adjustments necessary to correct the reported amounts.
Analysis Component
2. What is the error in total net income for the combined three-year period resulting from the inventory errors Explain.
3. Explain why the overstatement of inventory by $18,000 at the end of 2014 results in an overstatement of equity by the same amount in that year.
Explanation
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Verified
Balance sheet
Balance sheet refers to t...
Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta
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