Brown Brothers’ income statements for the past 3 years are shown below.

Because of errors, the 2018 ending inventory is understated by $2000 and the 2019 ending inventory is overstated by $6000. The 2020 ending inventory is correct.

Required

(a) Determine the correct amount of profit for each of the 3 years.

(b) Determine the total profit for the 3‐year period as shown and as corrected.

Transcribed Image Text:

2018 2019 2020 Net sales $68.000 $78.000 $70000 Beginning inventory 16000 14 000 20000 Net purchases 30 000 36 000 22000 Goods available for sale 46000 50 000 42 000 Ending inventory 14000 20 000 12000 Cost of sales 32 000 30 000 30000 Gross profit 36 000 48 000 40000 Other expenses 16000 14 000 19000 Profit $20000 $34000 $21000