A company understated its ending inventory balance by $5,000 in 2018. What impact will this error have on cost of goods sold and
1 answer:
Answer:
COGS overstated for 5,000
Explanation:
<em>The COGS will be overstated for the same ammount,</em> that is because of the inventory identity.
If ending Inventory has a problem, it will be transferred to COGS as well to equalize the formula
If ending Inventory is understated it means their alue is less than it's real value,
so to balance the formula COGS need to be overstated.
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For this case we have an equation of the form:
Where,
A: initial amount
b: growth rate
x: number of years
Substituting values we have:
By the time the earnings increase to 75000 we have:
From here, we clear x:
Answer:
you will have to wait until 23.95 years your winnings are worth $ 75,000
Where,
A: initial amount
b: growth rate
x: number of years
Substituting values we have:
By the time the earnings increase to 75000 we have:
From here, we clear x:
Answer:
you will have to wait until 23.95 years your winnings are worth $ 75,000