Question

Vibrant Company had $930,000 of sales in each of three consecutive years 2016-2018, and it purchased merchandise costing $515,000 in each of those years. It also maintained a $230,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as $210,000 rather than the correct $230,000. Required: 1. Determine the correct amount of the company's gross profit in each of the years 2016-2018 2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of the years 2016-2018 Complete this questions by entering your answers in the below tabs. Required 1 Required 2 Determine the correct amount of the company's gross profit in each of the years 2016-2018. VIBRANT COMPANY Comparative Income Statements 3-year total Cost of goods Cost of goods and B reda >

Answer 1

1)

VIBRANT COMPANY
Comparative Income Statements
	2016		2017		2018		3-year total
Sales		$930000		$930000		$930000	$2790000
Cost of goods sold
Beginning inventory	230000		230000		230000		690000
Add: Purchases	515000		515000		515000		1545000
Cost of goods available for sale	745000		745000		745000		2235000
Less: Ending inventory	(230000)		(230000)		(230000)		(690000)
Cost of goods sold		(515000)		(515000)		(515000)	(1545000)
Gross profit		$415000		$415000		$415000	$1245000

2)

VIBRANT COMPANY
Comparative Income Statements
	2016		2017		2018		3-year total
Sales		$930000		$930000		$930000	$2790000
Cost of goods sold
Beginning inventory	230000		210000		230000		670000
Add: Purchases	515000		515000		515000		1545000
Cost of goods available for sale	745000		725000		745000		2215000
Less: Ending inventory	(210000)		(230000)		(230000)		(670000)
Cost of goods sold		(535000)		(495000)		(515000)	(1545000)
Gross profit		$395000		$435000		$415000	$1245000