Question

Blue Spruce Corp. reported these income statement data for a 2 year period 2022 2021 Sales revenue Beginning inventory Cost of goods purchased Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross profit $256,300 $221.480 37.000 33.940 202.250 162.350 239.250 196.290 58.370 37.000 180.880 159.290 $75.420 $62.190 Blue Spruce Corp. uses a periodic inventory system. The inventories at January 1, 2021, and December 31, 2022, are correct. However, the ending inventory at December 31, 2021, is overstated by $7.670 Prepare correct income statement data for the 2 years 2021 2022 Sales Cost of goods sold Beginning inventory Cost of goods purchased Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross profit e Textbook and Media What is the cumulative effect of the inventory error on total gross profit for the 2 years? The cumulative effect on total gross profit for the two years is 5 eTextbook and Media

Answer 1

Ans 1 Particulars 2021 2022 $2,21,480 $2,56,300 Sales Cost of Good Sold Beginning Inventory Cost of Good Purchased Cost of Good Available for Sale $1,96,290 $2,31,580 Less: Ending Inventory $29,330 $33,940 $1,62,350 $2,02,250 $29,330 $58,370 $1,66,960 $1,73,210 Cost of Good Sold $54,520 $83,090 Gross Profit Note: Inventory is overstated by $7670 So correct inventory will be [$37000-$7670] $29330 Particulars Correct Profit Less: Proft before correction Impact on profit Cumulative Impact Ans 2 2021 2022 $54,520 $62,190 $83,090 $75,420 $1,37,610 $1,37,610 -$7,670 $7,670 $0 The cumulative effect on total gross profiy for the two years is $0