Homework Answers
2017 Opening Inventory is overstated by $2000 while ending inventory is correct
Change in inventory is charged as a part of cost of goods sold
Hence, Cost of goods will be overstated by $2000
And 2017 Income will be understated by $2000
2016 income is overstated by $2000
Hence, the answer is
2016 ending inventory is overstated by $2000
4.Cost of Goods sold = Beginning Inventory + Purchases – Ending Inventory
14000 = 4000+Purchases -2000
Purchases = $12,000
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