Question 20 An entry to record Purchases and related Accounts Payable of $14,000

Question

Question 20 An entry to record Purchases and related Accounts Payable of $14,000 for merchandise purchased on December 23, 2018, was recorded in January 2019. This merchandise was not included in inventory at December 31, 2018. What effect does this error have on reported net income for 2018? What entry should be made to correct for this error, assuming that the books are not closed for 2018? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) This error has understate on net income. Account Titles and Explanation Inventory Debit Credit 14000 Inventory Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Journal entry

Date

Particulars

Debit

Credit

31-Dec-18

Inventory (purchase a/c)

$14,000.00

To Accounts payable a/c

$14,000.00

This error Understate on Income because inventory doenot included but Inventory consumed will be included in expenses

Journal entry

Date

Particulars

Debit

Credit

31-Dec-18

Inventory (purchase a/c)

$14,000.00

To Accounts payable a/c

$14,000.00

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.