ageNoWvz1 Online teac. Cengage CengageNOWv2 1 Online teac eBook Calculator Madis

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ageNoWvz1 Online teac. Cengage CengageNOWv2 1 Online teac eBook Calculator Madison River Supply Co. sells canoes, kayaks, w hitewater rafts, and other boating supplies. During the taking of its physical Inventory on 31, 20Y8, Madison incorrectly counted its inventory as $739,710 Instead of the correct amount of $761,900. Enter all amounts as positive numbers. a. State the effects of the error on the December 31, 20Y8, balance sheet of Madison River Supply. Balance Sheet Items Inventory Current Assets Total Assets Stockholders' Equity b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8 Understated/Overstated Amount Income Statement Items Overstated/Understated Amount Cost of Goods Sold Gross Profit Net Income c. If uncorrected, what would be the effects of the error on the 20Y9 income statement? Income Statement Items Cost of Goods Sold Overstated/ Understated Amount Gross Profit Net Income d. If uncorrected, what would be the effects of the error on the December 31, 20Y9, balance sheet?

Explanation / Answer

1) Statement of Effect of Error on Dec31st 20Y8 Financial statements :

2) Statement of Effect of Error if Uncorrected on the 20Y9 Income statement :

Particulars Understated/Overstated Amount($) Balance sheet : Inventories Understated 22,190 Current Assets Understated 22,190 Total Assets Understated 22,190 Stock holder's equity Understated 22,190 Income statement : Cost of goods sold Overstated 22,190 Gross Profit Understated 22,190 Net income Understated 22,190

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