Company failed to count $1000 worth of merchandise (previously recorded) while taking a physical inventory at year-end using the periodic inventory system.
What journal entries we need to correct this mistake?
Ending inventory was understated by $1000 at the year end say 2013. Net income is understated because cost of goods sold was overstated.
The error results in understatement of net ...
The solution covers complete description of effect of inventory effect on year end financial statements and related financial ratios in addition to presentation of journal entry to correct inventory error.