Question

Poppy Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,200, and its ending inventory on December 31 was understated by $15,400. In addition, a purchase of merchandise costing $21,400 was incorrectly recorded as a $2,140 purchase. None of these errors were discovered until the next year. As a result, Poppy's cost of goods sold for this year was:

Answer 1

Answer:

the cost of goods sold is $34,460 understated

Explanation:

The computation of the cost of goods sold is shown below

Let us assume the cost of goods sold be X - Y

X + $30,200 + ($21,400 - $2,140) = Y + $15,400

X + $49,460 =  Y + $15,000

X - Y = $49,460 - $15,000

X - Y = $34,460

Hence, the cost of goods is $34,460

Since both the ending and opening inventory are understated so the cost of goods sold is also understated

Therefore the cost of goods sold is $34,460 understated