Effects of Inventory Errors

Only available on StudyMode
  • Download(s) : 115
  • Published : November 15, 2008
Open Document
Text Preview
Effects of Inventory errors
Seshavradhanr Rao Maramraj
ACC 539
Week 2
August 10 2008

Effects of Inventory errors

A. The ending inventory reported in 2002was overstated by $ 23,500 for merchandise that Kirk’s Servistar hold on consignment. Therefore, the ending inventory in 2002 is $ 91400-$ 23,500 = $ 67,900 and the beginning inventory in 2003 is $ 67,900. The correction of the 2002 and 2003 income statement is

|  |  |2003 |  |  |2002 |  | |  |Sales | |$541,200 |  | | | |  | |  |Cost of Goods Sold: | | |  | | |$523,600 |  | |  |Beginning inventory |$67,900 | |  | |$85,300 | |  | |  |Cost of goods purchased |393,000 | |  | |366,500 | |  | |  |Cost of goods available for sale |$460,900 | |  | |$451,800 | |  | |  |Less: ending inventory |(79,800) | |  | |(67,900) | |  | |  |Cost of goods sold | |(381,100) | | | |(383,900) |  | |  |Gross profit | |$160,100 |  | | |$139,700 |  | |  |Operating expenses | |(103,700) | | | |(94,700) |  | |  |Net income (ignoring income taxes) | |$56,400 |  | | |$45,000 |  | |  |  |  | ...
tracking img