Effect of inventory error on elements of financial statements
The ending inventory for Elm Co. was incorrectly adjusted, which caused it to be understated by $12,500 for 2011.
Required
Was each of the following amounts overstated, understated, or not affected by the error?
Item No. | Year | Amount |
1 | 2011 | Beginning inventory |
2 | 2011 | Purchases |
3 | 2011 | Goods available for sale |
4 | 2011 | Cost of goods sold |
5 | 2011 | Gross margin |
6 | 2011 | Net income |
7 | 2012 | Beginning inventory |
8 | 2012 | Purchases |
9 | 2012 | Goods available for sale |
10 | 2012 | Cost of goods sold |
11 | 2012 | Gross margin |
12 | 2012 | Net income |
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