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Aruba Inc. reported the following partial income statement data for the years ended December 31, 2018, and 2017: ____________________2018_________2017 Sales............................$265,000..........$250,000

Question:

Aruba Inc. reported the following partial income statement data for the years ended December 31, 2018, and 2017:
____________________2018_________2017
Sales............................$265,000..........$250,000
Cost of goods sold........205,000............194,000
Gross profit.....................60,000..............56,000
Inventory was reported in the current financial position at $44,000, $52,000, and $49,000 at the end of 2016, 2017, and 2018, respectively. The ending inventory amounts for 2016 and 2018 are correct. However, the ending inventory at December 31, 2017, is understated by $8,000.
Instructions
(a) Prepare correct income statements for 2017 and 2018 through to gross profit.
(b) What is the cumulative effect of the inventory error on total gross profit for these two years?
(c) Calculate the gross profit margin for each of these two years, before and after the correction.
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...

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a 2018 2017 Sales 265 000 250 000 Cost of goods sold see 1 and 2 213 000 186 000 Gross profit 52 0…View the full answer


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Related Book For  answer-question
Financial Accounting Tools for Business Decision Making

Financial Accounting Tools for Business Decision Making

ISBN: 978-1119368458

7th Canadian edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

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Question Posted: June 15, 2017 09:11:24
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