Boreal Bikes’ 31 December 2024 ending inventory was understated by $30,000; the purchase was recorded correctly. Give the effect on each 2024 line using the sign convention **overstated = positive, understated = negative** (enter 0 if correct).
Boreal Bikes’ 31 December 2024 ending inventory was understated by $30,000; the purchase was recorded correctly. Give the effect on each 2024 line using the sign convention **overstated = positive, understated = negative** (enter 0 if correct).
Answer
2024 COGS → 30000 · 2024 Net income → -30000 · 31 Dec 2024 Retained earnings → -30000 · 31 Dec 2024 Total assets → -30000
Cells - 2024 COGS · ±0 · unit $ - 2024 Net income · ±0 · unit $ - 31 Dec 2024 Retained earnings · ±0 · unit $ - 31 Dec 2024 Total assets · ±0 · unit $ Opening + purchases − ending = COGS. Ending understated 30,000 → COGS overstated +30,000 → net income understated −30,000 → retained earnings understated −30,000 → inventory, hence total assets, understated −30,000.
L1 §7.5; OA1 §10.4