Is income overstated or understated why did rollins take

Assignment Help Accounting Basics

Reference no: EM13600112

Accounts officers at Xerox corporation discovered that significant errors have been made in the valuation of inventory and are worried that it might have significant impact on the net income and earnings per share. What are the possible top three effects of the errors on net income? What could have been the top two reasons behind incorrect valuation of the inventory?

The net income of Reliable Provision company decreased sharply during 2007. Clay Rollins, owner of the store, anticipates the need for a bank loan in 2008. Late in 2007, he instructed the accountant to record a $70,000 sale of recreational gear to the Smith family, even though the goods will not be shipped from the manufacturer until January 2008. Rollins told the accountant not to make the following adjusting entries:

Salary owed to employees: $5,000
Expired prepaid insurance: $2,500

Is income overstated or understated? Why did Rollins take these actions? Are they ethical? Give reasons for your answer. As a friend, what advice would you give the accountant?

Reference no: EM13600112

Questions Cloud

The following three seperate situations require adjusting : the following three seperate situations require adjusting journal entries to prepare financial statements as of april

How much will you have to pay in interest for a credit : how much will you have to pay in interest for a credit card balance of 9135 that is one month overdue if a 28 annual

Consider an industry facing fundamental technology change : consider an industry facing fundamental technology change e.g. fixed-point telecommunications and internet protocols

Asher corporation incurred the following manufacturing : asher corporation incurred the following manufacturing costs this period direct labor 912000 direct materials 782000

Is income overstated or understated why did rollins take : accounts officers at xerox corporation discovered that significant errors have been made in the valuation of inventory

Scudder company has two operating departments mixing and : scudder company has two operating departments mixing and forming. mixing has 240 employees and occupies 22000 ftsup2.

Record in sales journal purchase journal cash receipts : jan 1 - issued check number 3010 to pay the january rent in the amount of 1450jan 6 - purchased 5600 of merchandise for

At the beginning of july the corporation had 0 beginning : the john fletcher corporation manufactures mountain bikes. at the beginning of july the corporation had 0 beginning

Craft concept manufactures small tables in its processing : craft concept manufactures small tables in its processing department. direct materials are added at the initiation of

User Account

All Pages