Reference no: EM133128942
Question - The records of Divany Ltd. show the following data for the years ended July 31:
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2021
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2020
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2019
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Statement of Income:
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Sales
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$360,000
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$340,000
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$320,000
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Cost of goods sold
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247,000
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234,000
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223,000
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Operating expenses
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64,000
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60,000
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60,000
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Statement of financial position:
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Inventory
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48,000
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48,000
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25,000
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Accounts payable
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22,000
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9,000
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16,000
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While preparing for the year end on July 31, 2020, the following errors, reflected in the data above, occurred:
1. When counting the year-end inventory, staff members counted items costing $3,000 twice. The company's accountants included this overstatement in the 2020 year-end Inventory account. Staff counted the inventory correctly on July 31, 2021.
2. Divany purchased $10,000 of goods from a supplier on July 30, 2020, with shipping terms FOB shipping point. The company did not receive the goods until August 4, 2020, at which time the accountant recorded the purchase.
Required - Assume that, just before recording the closing entries for the 2020 year end, you discovered the two errors described above. Provide a journal entry to correct each error.