Wu Jewelry reported the following income statement data for a 2-year period. Wu uses a periodic inventory
Question:
Wu Jewelry reported the following income statement data for a 2-year period.
Wu uses a periodic inventory system. The inventories at January 1, 2024, and December 31, 2025, are correct. However, the ending inventory at December 31, 2024, was understated HK$60,000.
Instructions
a. Prepare correct income statement data for the 2 years.
b. What is the cumulative effect of the inventory error on total gross profit for the 2 years?
c. Explain in an email to the president of Wu what has happened, i.e., the nature of the error and its effect on the financial statements.
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Related Book For
Financial Accounting With International Financial Reporting Standards
ISBN: 9781119787051
5th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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