Refer back to the Clinton Cycles inventory data in Starter 6-11. The ending inventory balance is stated correctly at the end of 2017. What effect would the overstatement of ending inventory made in 2016 have on cost of goods sold and gross margin for the year ended December 31, 2017?
In starter 6-11
Sales revenue .................................. $150,000
Cost of goods sold:
Beginning inventory .......................... 22,000
Net purchases .................................. 80,000
Cost of goods available for sale ............ 102,000
Less: ending inventory ...................... (24,000)
Cost of goods sold ........................... 78,000
Gross margin .................................. $ 72,000