Exercise 6-9 Your answer is partially correct. Try again. Elliott\'s Hardware re
ID: 2542370 • Letter: E
Question
Exercise 6-9 Your answer is partially correct. Try again. Elliott's Hardware reported cost of goods sold as follows. 2016 2017 Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory Cost of goods sold $25,000 154,000 179,000 30,000 $149,000 30,000 205,000 235,000 38,000 $197,000 Elliott's made two errors: (1) 2016 ending inventory was overstated $3,600, and (2) 2017 ending inventory was understated $6.500. Compute the correct cost of goods sold for each year 2016 2017 Cost of goods sold Type here to searchExplanation / Answer
Cost of goods sold = Opening inventory + Purchases – Ending inventory.
It is given that the 2016 ending inventory is overrated $3600.
Therefore the correct 2016 ending inventory is 30000-3600 = $26400.
As the ending inventory of 2016 will become opening inventory of 2017, the correct opening inventory of 2017 also is $26400.
It is given that the 2017 ending inventory is understated $6500.
Therefore the correct 2017 ending inventory is 38000+6500 = 44500.
Now, we need to calculate the correct cost of goods sold with the corrected data.
Statement showing corrected cost of goods sold.
Particulars
2016
2017
Beginning Inventory (1)
25000
(30000-3600)
26400
Cost of goods purchased (2)
154000
205000
Cost of goods available for sale (3) = (1)+(2)
179000
231400
Ending inventory(4)
(30000-3600)
26400
(38000+6500)
44500
Cost of goods sold (5)= (3)-(4)
152600
186900
Statement showing corrected cost of goods sold.
Particulars
2016
2017
Beginning Inventory (1)
25000
(30000-3600)
26400
Cost of goods purchased (2)
154000
205000
Cost of goods available for sale (3) = (1)+(2)
179000
231400
Ending inventory(4)
(30000-3600)
26400
(38000+6500)
44500
Cost of goods sold (5)= (3)-(4)
152600
186900
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