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3 years ago

Smart Watch Company reported the following income statement data for a 2-year period.

Business

1 answer:

Ronch [10]3 years ago

8 0

Answer and Explanation:

a. The preparation of the correct income statement is as follows:

Sales revenue $220,000 $250,000

Cost of goods sold

Beginning inventory $32,000 $38,000

Add: Costs of goods

purchased $173,000 $202,000

Cost of goods available for sale $205,000 $240,000

Less: Ending inventory -$38,000 -$52,000

($44,000 - $6,000 )

Cost of goods sold $167,000 $188,000

Gross profit $53,000 $62,000

b. The cumulative effect is

Incorrect gross profit = $59,000 + $56,000 = $115,000

Correct gross profit = $53,000 + $62,000 = $115,000

Net effect would be zero

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2 years ago

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3 years ago

Buttner Company borrows $88,500 on September 1, 2014, from Harrington State Bank by signing an $88,500, 12%, one-year note.

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Answer:

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