Prepare journal entries to correct the error

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Reference no: EM132791232

The company provided the following inventory data for 20X1:

Jan 1 Beginning inventory 1,000 units @ $4.00
May 18 Cash Purchase 2,000 units @ $4.50
Oct 5 Credit Purchase &..;@$4.80
Nov 24 Credit Sales 3,000 units
Dec 1 Credit Purchase 1,000 units @$5.00

The company's reporting date is December 31.

Required :

Problem (1) Assume that the company uses perpetual inventory system and weighted average method, prepare journal entries on Oct 5 and Nov 24 (Please do not prepare entries to recognize sales revenue).

Problem (2) Assume that the company uses periodic inventory system and weighted average method, prepare journal entries on Dec 1 and Dec 31.

Problem (3) Assume that the company uses periodic inventory system and FIFO, prepare journal entries on May 18 and Dec 31.

Problem (4) In 20X2, the company found an overstatement of $2,000 for 20X1's ending inventory. The income tax rate is 30%. Prepare journal entries to correct this error.

Reference no: EM132791232

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