La Castle Bakery reported sales revenue of $41,000 and cost of goods sold of $21,000. Compute La

Question:

La Castle Bakery reported sales revenue of $41,000 and cost of goods sold of $21,000. Compute La Castle’s correct gross profit if the company made either of the following independent accounting errors. Show your work.
a. Ending merchandise inventory is overstated by $5,000.
b. Ending merchandise inventory is understated by $5,000.