S6-9 (similar to) Question Help Riderco Pool Supplies\'s merchandise inventory d

Question

S6-9 (similar to) Question Help Riderco Pool Supplies's merchandise inventory data for the year ended December 31, 2019, follow. (Click the icon to view the inventory data.) Read the requirements Data Table Requirement 1. Assume that the ending merchandise inventory was accidentally overstated by $1,600. What are the Cost of goods soldo Sales Revenue S 52,000 Cost of Goods Sold 1. Assume that the ending merchandise inventory was accidentally overstated by $1.600. What are the correct amounts for cost of goods sold and gross profit? How would the inventory error affect Riderco Pool Supplies's cost of goods sold and gross profit for the year ended December 31, 2020, if the error is not corrected in 2019? Beginning Merchandise Inventory Net Cost of Purchases Cost of Goods Available for Sale Less: Ending Merchandise Inventory Cost of Goods Sold 4,700 30,000 34,700 4,300 2. 30,400 S 21,600 Gross Profit PrintDone Enter any number i PrintDone parts remaining Clear wer 10:50 PM

Explanation / Answer

1) Calculation of cost of goods sold and gross profit: Particulars Amount Amount Sales Revenue 52000 Cost of goods sold: Beginning Merchandise Inventory 4700 Net cost of purchases 30000 Cost of Goods Available for sale 34700 Less: Ending merchandise Inventory( 4300-1600) 2700 Cost of goods sold 32000 Gross profit 20000 Therefore Cost of goods sold is $32000 and gross profit is $20000 2) If inventory error is not corrected in 2019 then there will be increase in the beginning merchandise inventory in 2020 and as a result of which there will be increase in the amount of Cost of goods sold and due to which the amount of gross profit will decrease.

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