Next year’s effect of an inventory error [5-10 min]
Refer back to the California Pool Supplies’ inventory data in Short Exercise.
Requirement
1. How would the inventory error affect California Pool Supplies’ cost of goods sold and gross profit for the year ended December 31, 2013, if the error is not corrected in 2012?
Effect of an inventory error—one year only [5 min]
California Pool Supplies’ inventory data for the year ended December 31, 2012, follow:
Sales revenue ............... | $ 60,000 |
Cost of goods sold: | |
Beginning inventory ........ | $ 4,200 |
Net purchases ............ | 26,600 |
Cost of goods available ...... | $ 30,800 |
Ending inventory .............. | (6,200) |
Cost of goods sold ............ | $ 24,600 |
Gross profit ..................... | $ 35,400 |
Assume that the ending inventory was accidentally overstated by $2,400.
Requirement
1. What are the correct amounts for cost of goods sold and gross profit?
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