Next year’s effect of an inventory errorRefer back to the California Pool Supplies’ invent...

Next year’s effect of an inventory error

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?

Exercise

Effect of an inventory error—one year only

California Pool Supplies’ inventory data for the year ended December 31, 2012, follow:

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?