Can someone please provide a detailed explanation of the solution
Homework Answers
Ending inventory overstated means ending inventory is shown at higher price. When ending inventory is higher than Cost of Goods Sold will decreases and net income will increase of that year.
But in next year Opening inventory will be at higher site so Cost of Goods Sold will be higher site at net revenue will be decrease in that year.
In above given statement ending inventory is overstated by $ 22,000 it will impact as below,
|
Year |
Inventory |
Cost of Goods Sold |
Stockholder’s Equity |
|
2018 |
Increase by $ 22,000 |
Decrease |
Increases |
|
2019 |
Decrease by $ 22,000 |
Increase |
Decreases |
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1. Restate the partial income statements to
reflect the correct amounts, after fixing the inventory error.
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each year (a) before the correction and (b) after
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2-b. Does the pattern of gross profit
percentages lend confidence to...
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