Reference no: EM132896926

Question - In early 2021, the new controller discovers a variety of inventory errors. The company uses the periodic inventory method and uses a Purchases account to accumulate inventory purchases during the year. The company has a 12/31 yearend.

1. Purchases in 2019 were overstated by $5,000 because an invoice was entered and paid twice in error. The error was discovered in 2020 and the vendor gave the company a refund in 2020 for the overpayment. The company credited Purchases in 2020 when the refund was processed.

2. Ending inventory at 12/13/19 is understated by $10,000.

3. Purchases in 2020 are understated by $4,000. These items were received in December 2020, but were recorded in purchases in January 2021 when the invoice was paid.

4. Ending inventory at 12/31/20 is understated by $12,000.

Additional information:

Ending inventory as reported in the 2020 Annual Report amounted to $600,000. The 2020 Annual Report was issued before the above errors were identified.

Prepare the necessary opening balance sheet journal entry at 1/1/2021 related to the above items. All lines do not have to be used.

When the restated financial statements are issued, what is the balance for Inventory at 12/31/20 (i.e., what is the opening balance of inventory on 1/1/21)?