Foyle Hardware reported cost of goods sold as follows. 2014 2013 Beginning inven

Question

Foyle Hardware reported cost of goods sold as follows. 2014 2013 Beginning inventory $30,890 $23,910 Cost of goods purchased 175,650 166,760 Cost of goods available for sale 206,540 190,670 Less: Ending inventory 38,290 30,890 Cost of goods sold $168,250 $159,780 Foyle made two errors: 1 2013 ending inventory was overstated by $1,980. 2 2014 ending inventory was understated by $4,310. Compute the correct cost of goods sold for each year. 2013 & 2014 Foyle Hardware reported cost of goods sold as follows. 2014 2013 Beginning inventory $30,890 $23,910 Cost of goods purchased 175,650 166,760 Cost of goods available for sale 206,540 190,670 Less: Ending inventory 38,290 30,890 Cost of goods sold $168,250 $159,780 Foyle made two errors: 1 2013 ending inventory was overstated by $1,980. 2 2014 ending inventory was understated by $4,310. Compute the correct cost of goods sold for each year. 2013 & 2014

Explanation / Answer

End Inventory = Begin Inventory + Purchases – COGS COGS = Begin Inventory + Purchases - End Inventory End In Inventory 2013 becomes your begin Inventory 2014. So, if your End 2013 Inventory (which is begin 2014) was overstated 1980 and your end 2014 is understated 4310. The net effect of [adjustment for] the two for end Inventory 2014 is: +4310 - 1980 = 2330

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