Partial income statements for Murphy & Murphy (M & M) reported the following summarized amounts: Quarter 1 $100,000 75,000 Quarter 2 $99,000 79,200 Quarter 3 $120,000 85,050 Quarter 4 $108,000 79,920 Net Sales Cost of Goods Sold Gross Profit $ 25,000 $19,800 $ 34,950 $ 28,080 After these amounts were reported, M & M's accountant determined the inventory at the end of Quarter 2 was understated by $4,950. The inventory balance at the end of the other three quarters was accurately stated. Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error. 2. Compute the gross profit percentage for all four quarters both (a) before the correction and (b) after the correction. Does the pattern of gross profit percentages lend confidence to your corrected amounts? TIP: Gross profit percentage is calculated as (Gross Profit + Net Sales) x 100.
Partial income statements for Murphy & Murphy (M & M) reported the following summarized amounts: Quarter 1 $100,000 75,000 Quarter 2 $99,000 79,200 Quarter 3 $120,000 85,050 Quarter 4 $108,000 79,920 Net Sales Cost of Goods Sold Gross Profit $ 25,000 $19,800 $ 34,950 $ 28,080 After these amounts were reported, M & M's accountant determined the inventory at the end of Quarter 2 was understated by $4,950. The inventory balance at the end of the other three quarters was accurately stated. Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error. 2. Compute the gross profit percentage for all four quarters both (a) before the correction and (b) after the correction. Does the pattern of gross profit percentages lend confidence to your corrected amounts? TIP: Gross profit percentage is calculated as (Gross Profit + Net Sales) x 100.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 38E: Sundahl Companys income statements for the past 2 years are as follows: Refer to the information for...
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Transcribed Image Text:Partial income statements for Murphy & Murphy (M & M) reported the following summarized amounts:
Quarter 1
$100,000
Quarter 2
$99,000
79,200
Quarter 3
$120,000
Quarter 4
$108,000
79,920
Net Sales
Cost of Goods Sold
75,000
$ 25,000
85,050
Gross Profit
$19,800
$ 34,950
$ 28,080
After these amounts were reported, M & M's accountant determined the inventory at the end of Quarter 2 was understated by $4,950.
The inventory balance at the end of the other three quarters was accurately stated.
Required:
1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.
2. Compute the gross profit percentage for all four quarters both (a) before the correction and (b) after the correction. Does the pattern
of gross profit percentages lend confidence to your corrected amounts? TIP: Gross profit percentage is calculated as (Gross Profit +
Net Sales) x 100.
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.
MURPHY & MURPHY COMPANY
Partial Income Statements (Corrected)
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Net Sales
Cost of Goods Sold
Gross Profit
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