10) Prunedale Co. uses a periodic inventory system. Beginning inventory on Janua

Question

10) Prunedale Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,000, and its ending inventory on December 31 was understated by $17,000. In addition, a purchase of merchandise costing $20,000 was incorrectly recorded as a $2,000 purchase. None of these errors were discovered until the following year. As a result, Prunedale's cost of goods sold for this year was: Question 10 options: 1) Overstated by $31,000. 2) Overstated by $5,000. 3) Understated by $31,000. 4) Understated by $48,000.

Explanation / Answer

3) Understated by $31,000

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