20X3 Sales
20X4 $100,000
$109,000
Cost of goods sold
62,000
74,000
Gross profit
38,000
35,000
Expenses
26,000
22,000
Net income
$12,000
$ 13,000
A recent review of the accounting records discovered that the 20X3 ending inventory had been understated by $4,000.
a. Prepare corrected 20X3 and 20X4 income statements. b. What is the effect of the error on ending owner’s equity for 20X3 and 20X4?
Chapter 5, Problem 2
Inventory valuation methods: computations and concepts. Wave Riders Surfboard