Effect of Errors in Physical Inventory Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 2016, Fonda Motorcycle Shop incorrectly counted its inventory as $337,500 instead of the correct amount of $328,850.

Enter all amounts as positive numbers.

a. State the effect of the error on the December 31, 2016, balance sheet of Fonda Motorcycle Shop.

Balance Sheet Items Understated / Overstated Amount
Merchandise Inventory Overstated $
Current Assets Overstated $
Total Assets Overstated $
Owner's Equity Overstated $
b. State the effect of the error on the income statement of Fonda Motorcycle Shop for the year ended December 31, 2016.

Income Statement Items Understated / Overstated Amount
Cost of Merchandise Sold Understated $
Gross Profit Overstated $
Net Income Overstated $
c. If uncorrected, what would be the effect of the error on the 2017 income statement?

Income Statement Items Understated / Overstated Amount
Cost of Merchandise Sold Overstated $
Gross Profit Understated $
Net Income Understated $

answer is in explanation

Explanation:

Effect of Errors in Physical Inventory

Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 2016, Fonda Motorcycle Shop incorrectly counted its inventory as $337,500 instead of the correct amount of $328,850.

Enter all amounts as positive numbers.

a. State the effect of the error on the December 31, 2016, balance sheet of Fonda Motorcycle Shop.

Balance Sheet ItemsUnderstated / OverstatedAmount

Merchandise InventoryOverstated$

Current AssetsOverstated$

Total AssetsOverstated$

Owner's EquityOverstated$

b. State the effect of the error on the income statement of Fonda Motorcycle Shop for the year ended December 31, 2016.

Income Statement ItemsUnderstated / OverstatedAmount

Cost of Merchandise SoldUnderstated$

Gross ProfitOverstated$

Net IncomeOverstated$

c. If uncorrected, what would be the effect of the error on the 2017 income statement?

Income Statement ItemsUnderstated / OverstatedAmount

Cost of Merchandise SoldOverstated$

Gross ProfitUnderstated$

Net IncomeUnderstated$

Expert Answer

100% (9 ratings)

State the effect of the error on the December 31, 2016, balance sheet of Fonda Motorcycle Shop. Balance Sheet Items Understated / Overstated Amount Merchandise I

view the full answer

odd consecutive integers are odd integers that follow each other. they have a difference of 2 between every two numbers. if n is an odd integer, then n, n+2, n+4 and n+6 will be odd consecutive integers. the first number in the pattern is always the variable on its own or in this case, "n". examples.