Award: 3 out of 4.00 points Assume that the ending inventory of a merchandising

Question

Award: 3 out of 4.00 points Assume that the ending inventory of a merchandising firm is overstated by $5,300 Required: a. By how much and in what direction (overstated or understated) will the firm's cost of goods sold be misstated? goo 5.3000 overstate y b. If this error is not corrected, what effect will it have on the subsequent period's operating income? Operating income will be too low. c. If this error is not corrected, what effect will it have on the total operating income of the two periods (the period in which there is an error and the subsequent period) combined? No.effect.on.operating income e

Explanation / Answer

a) Cost of goods sold understated by $5300

b) Operating income will be too low

c) No effect on operating income

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