Overstated understated inventory errors Hubert

School: Iowa State University - Course: FOR 2019 - Subject: Accounting

For 2018: If the inventory has been overstated by $3,000, that is to say that the COGS was un has been overstatedby $3,000 beacause if the COGS decreases it is to say that the if net income increases automatically , the account of stockholder's equityalso inc For 2019: If the ending inventory has been understated by $19,000, that is to say that the COG inventrory 2018 which affects the net income that has been understated by $22,000 as well. If the net income decreases automatically the account of stockhloder's euqu 2018 AmountOverstated/UnderstatedAmount Total assets$3,000 Overstated$22,000 Stockholder's Equity$3,000 Overstated$22,000 Cost of goods sold$3,000 Understated$22,000 Net Income$3,000 overstated$22,000 2018 year2019 year Beginning Inventory ( B.I)54,00061,000 Cost of the goods purchased847,000891,000 Cost of the goodsavailble sale901,000952,000 Ending Inventory61,00074,000 Cost the good sold$840,000$878,000

ndersatated by $3,000 wich also affects the net income wich e net income increases at the same time. The inventory asset account on the balance sheet was overstated creases, which means that there has been an overstatement of $3,000 on stockholder'sequity. GS has been overstated by $22,000 ($19,000+$3,000) of oversatetementof beginningInventory 0 beacause ifthe COGS increases itis to say that the net income decreases the same time. The total asse uity also decreases which means that there has been understatedof $22,000 on stockholder's equity. 2019 overstated/understated Understated Understated Overstated Understated 2018Debit COGS837,000840,000 Purchases843,000 Inventory10,0007,000 2019 COGS900,000878,000 Purchases891,000 Inventory13,0009,000