Queen Enterprises is a furniture wholesaler Queen hired a

new
Queen Enterprises is a furniture wholesaler. Queen hired a new accounting clerk on January 1
of the current year. The new clerk does not understand accrual accounting and recorded the
transactions below based on when cash receipts and disbursements changed hands rather than
when the transaction occurred. Queen uses a perpetual inventory system, and its accounting
policy calls for inventory purchases to be recorded net of any discounts offered.Jan. 7 Paid
Hardwoods Forever Inc. $4,900 for furniture that it received on December 20. (This purchase
was recorded as a debit to Inventory and a credit to Accounts Payable on December 20 of last
year, but the accounting clerk ignores that fact.)Dec. 23 Received furniture from Koos Hoffwan
Co. for $10,000; terms 2/10, n/30.Dec. 26 Sold furniture to Beige Chipmunk Inc. for $15,000;
terms 1/10, n/30. The cost of the furniture to Queen was $12,250.Instructionsa. As a result of
the accounting clerk’s errors, compute the amount by which the following accounts are
overstated or understated:1. Accounts Receivable2. Inventory3. Accounts Payable4. Sales5.
Cost of Goods Soldb. Compute the amount by which net income is overstated or understated.c.
Prepare a single journal entry to correct the errors that the accounting clerk has made. (Assume
that Queen has yet to close its books for the current year.)d. Assume that Queen has already
closed its books for the current year. Make a single journal entry to correct the errors that the
accounting clerk has made.e. Assume that the ending inventory balance is correctly stated
based on adjustments resulting from a physical inventory count. (Cost of Goods Sold was
debited or credited based on the inventory adjustment.) Assume that Queen has already closed
its books for the current year, and make a single journal entry to correct the errors that the
accounting clerk has made.View Solution:
Queen Enterprises is a furniture wholesaler Queen hired a new
SOLUTION-- http://solutiondone.online/downloads/queen-enterprises-is-a-furniture-wholesaler-
queen-hired-a-new/

Unlock answers here solutiondone.online

Powered by TCPDF (www.tcpdf.org)