Staley Watch Company reported the following income statement data for a 2 year period: 2019 2020 Sales $210,000 $250,000 Cost of Goods Sold Beginning Inventory 32,000 44,000 Cost of Goods Purchased 173,000 202,000 Cost of Goods Available for Sale 205,000 246,000 Less: Ending Inventory 44,000 52,000 Cost of Goods Sold 161,000 194,000 Gross Profit 49,000 56,000 Staley uses periodic inventory system. The inventories at January 1, 2019, and December 31, 2020, are correct. However, the ending inventory at December 31, 2019, was overstated $5,000. Required: Prepare correct income statement data for the two years. What is the cumulative effect of the inventory error on total gross profit for the two years?
Staley Watch Company reported the following income statement data for a 2 year period: 2019 2020 Sales $210,000 $250,000 Cost of Goods Sold Beginning Inventory 32,000 44,000 Cost of Goods Purchased 173,000 202,000 Cost of Goods Available for Sale 205,000 246,000 Less: Ending Inventory 44,000 52,000 Cost of Goods Sold 161,000 194,000 Gross Profit 49,000 56,000 Staley uses periodic inventory system. The inventories at January 1, 2019, and December 31, 2020, are correct. However, the ending inventory at December 31, 2019, was overstated $5,000. Required: Prepare correct income statement data for the two years. What is the cumulative effect of the inventory error on total gross profit for the two years?
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 33BE
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COULD YOU PLEASE EXPLAIN STEP BY STEP
Staley Watch Company reported the following income statement data for a 2 year period:
|
|
2019 |
2020 |
|
Sales |
$210,000 |
$250,000 |
|
Cost of Goods Sold |
|
|
|
Beginning Inventory |
32,000 |
44,000 |
|
Cost of Goods Purchased |
173,000 |
202,000 |
|
Cost of Goods Available for Sale |
205,000 |
246,000 |
|
Less: Ending Inventory |
44,000 |
52,000 |
|
Cost of Goods Sold |
161,000 |
194,000 |
|
Gross Profit |
49,000 |
56,000 |
Staley uses periodic inventory system. The inventories at January 1, 2019, and December 31, 2020, are correct. However, the ending inventory at December 31, 2019, was overstated $5,000.
Required:
- Prepare correct income statement data for the two years.
- What is the cumulative effect of the inventory error on total gross profit for the two years?
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