Q6-55. The beginning and ending inventories of ITC Inc. are $21,000 and $45,000, respectively. A scrutiny...

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Q6-55. The beginning and ending inventories of ITC Inc. are $21,000 and $45,000, respectively. A scrutiny of inventory records confirms that while the beginning inventory is overvalued by 5%, the ending inventory is undervalued by 10%. Identify the net impact on the gross profit earned during the year. a. Gross profit will decrease by $1,000 c. Gross profit will increase by $6,000 b. Gross profit will increase by $5,000 d. Gross profit will decrease by $6,000 Q6-55. The beginning and ending inventories of ITC Inc. are $21,000 and $45,000, respectively. A scrutiny of inventory records confirms that while the beginning inventory is overvalued by 5%, the ending inventory is undervalued by 10%. Identify the net impact on the gross profit earned during the year. a. Gross profit will decrease by $1,000 c. Gross profit will increase by $6,000 b. Gross profit will increase by $5,000 d. Gross profit will decrease by $6,000

Answer rating: 100% (QA)

To calculate the net impact on gross profit we need to adjust the beginning and ending inv... View the full answer