O'Neil's Hardware Store, in St

question 26

Essay

O'Neil's Hardware Store, in St. John's, NL, prepared the following analysis of cost of goods sold for the previous three years: Profit for the years 2013, 2014, and 2015 was $83,000, $32,000, and $67,000, respectively. Since income had declined so much from 2013 to 2015, Mr. O'Neil hired a new accountant to investigate the cause(s) for the declines.
The accountant determined the following:
1. Purchases of $42,000 that occurred in 2013 were not recorded until 2014.
2. The December 31 2013 inventory should have been $23,000.
3. The 2014 ending inventory included inventory costing $6,000 that was purchased FOB destination point and was in transit at year end.
4. The 2015 ending inventory did not include goods costing $3,000 that were shipped on December 29 to Rosewell Plumbing Company, FOB shipping point. The goods were still in transit at the end of the year.
Instructions
Determine the correct income for each year. (Show all calculations.)

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Definitions:

Judgment

The ability to make considered decisions or come to sensible conclusions based on a critical assessment of facts and information.

Context

The circumstances or background that surround and give meaning to an event, statement, or idea.

Evaluative Belief

A judgment or assessment about the value or worth of something, based on criteria or standards.

Foundational Belief

Core convictions or assumptions that are deeply held and form the basis for an individual's worldview or philosophy.