Question

D Question 1 2 pts Portland Supplies Co. mistakenly excluded $3,000 of goods from its December 31, 2016 physical inventory court.it December 31, 2017 inventory amount was correct. As a result of this error, 2016 income is overstated by $3,000 2016 ending inventory is overstated by $3,000. 2017 income is overstated by $3,000 2017 cost of goods sold is overstated by $3.000. Question 2 2pts a company desires to increase its inventory then it should se more goods that pudrases during the period. purchase more goods antes during the period purchase the same amount of goods that sels increases se ng prices to the customers would not being to purchase Question 3

Answer 1

	Question 1.	2017 income is overstated by $3000
	explanation	ending inventory of 2016 is understated by 3000, this implies that :
		Income for 2016 was understated as cost of goods sold(Beginnng inventory+purchases - Ending inventory) is overstated for 2016
		Ending inventory of 2016 is beginning inventory of 2017 it means beginning inventory of 2017 is understated by $3000.
		It implies that cost of goods sold(Beginnng inventory+purchases - Ending inventory) is understated it means Income of 2017 is overstated.
	Question 2.	If company wants to increase it's inventory then it should
		Purchase more goods than it sells during the year.
		Selling more goods than purchases would reduce the inventory.
		Purchasing same amount of goods as selling would result in no change in inventory.
		Increasing selling prices to a level that customer would not be willing to purchase will also wont increase the inventory levels unless purchases are made.

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