The records of Fremont Corporation’s initial and unaudited accounts show the following ending inventory balances, which must be adjusted to actual…

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  1. Prepare a production cost report for Fremont using the weighted-average method. (Hint: You will need to calculate equivalent units for three categories: materials, labor, and overhead.)
  2. Show the journal entry required to correct the difference between the unaudited records and actual ending balances of Work-in-Process Inventory and Finished Goods Inventory. Debit or credit Cost of Goods Sold for any difference.
  3. If the adjustment in requirement (b) is not made, will the company’s income and inventories be overstated or understated?

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