At Year End, After Preparing the Financial Statements, Four Errors

question 74

Essay

At year end, after preparing the financial statements, four errors were found. The first line in the tabulation below gives the uncorrected amounts. You are to develop the correct amount on the bottom line by entering the corrections for each error; indicate subtractions with parentheses. Assume a periodic inventory system.
Income Statement for
Balance sheet 12/31/2003, year ending 12/31/2003 $\begin{array}{|l|l|l|l|l|l|l|}\hline &\text { Assets } & \text { Liabilities } & \begin{array}{l}\text { Owners' } \\\text { Equity }\end{array} & \text { Revenue } & \begin{array}{l}\text { Cost of } \\\text { Goods Sold }\end{array} & \begin{array}{l}\text { Gross } \\\text { Margin }\end{array} \\\hline \text { Reported amounts (uncorrected) } & 16,000 & 4,000 & 12,000 & 18,000 & 10,000 & 8,000 \\\hline \text { 1. Beg. } 2003 \text { invoice understated by } \$ 160 & & & & & & \\\hline \begin{array}{l}\text { 2. } 2003 \text { credit purchase } \$ 200 \text {; not recorded or inventoried in } \\\text { 2003. }\end{array} & & \\\hline \text { 3. Ending } 2003 \text { invoice overstated by } \$ 600 & & \\\hline\text { 4. } 2003 \text { credit sales of } \$ 1,000 \text { not recorded in } 2003 \text {; cost of }\\\text { goods sold amount } \$ 600 \text {; not included in } 2003 \text { ending }\\\text { inventory. }\\\hline\end{array}$

---

Definitions:

Consequences

Consequences are outcomes or effects that result from a particular action or set of conditions, often implying a focus on the results of actions and their impact on future events or situations.

Monroe Doctrine

A United States policy that opposed European colonialism in the Americas, stating that any intervention by external powers in the politics of the Americas would be seen as an act of aggression.

Issuance Factors

Factors that are considered when issuing a policy, debt, or securities which may include market conditions, regulatory requirements, and the financial health of the issuer.

Joint Statement

An official declaration or announcement issued together by two or more parties, typically by governments or organizations.