-8 Effects of inventory error Assume that the ending inventory of a merchandising a 2 firm is overstated by $40,000. Required: a. By how much and in what direction (overstated or understated) will the firm's cost of goods sold be misstated? b. If this error is not corrected, what effect will it have on the subsequent period's operating income? If this error is not corrected, what effect will it have on the total operating income of the two periods (the period in which there is an error and the subse- quent period) combined? с.
-8 Effects of inventory error Assume that the ending inventory of a merchandising a 2 firm is overstated by $40,000. Required: a. By how much and in what direction (overstated or understated) will the firm's cost of goods sold be misstated? b. If this error is not corrected, what effect will it have on the subsequent period's operating income? If this error is not corrected, what effect will it have on the total operating income of the two periods (the period in which there is an error and the subse- quent period) combined? с.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 25CE: Effects of Inventory Costing Methods Refer to your answers for Filimonov Inc. in Cornerstone...
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