Football, Inc.'s clerk made a mistake while preparing the financial statements. The ending inventory for Year 1 should have been $20,000, but the clerk recorded it as $23,000 on the income statement. Assume that sales for Years 1 and 2 are $90,000 per year and purchases are $20,000 per year. Beginning inventory for Year 1 of $12,000 and ending inventory for Year 2 of $21,000 were correctly recorded. Complete the following income statement for Year 1 and 2.
Definitions:
Predetermined Overhead Rate
An estimated rate used to allocate manufacturing overhead costs to individual units of production.
Job Order Production
A production process in which products are manufactured or services are provided based on specific customer orders, allowing for customization.
Cost Accounting System
A method of accounting that captures all costs associated with the production of goods or services to evaluate performance and make decisions.
Monitoring
Monitoring refers to the systematic process of observing, checking, and recording activities or data for a specific purpose, often to detect changes over time.
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