Designer Shoe Warehouse reported the following items in its fiscal 2019 financial report (dollars in millions):

	2019		2018
Sales		$3,184		$2,811
Cost of goods sold:
Beginning inventory	$502		$500
Purchases	2,382		2,008
Goods available for sale	$2,884		$2,508
Less: Ending inventory	645		502
Cost of goods sold		2,239		2,006
Gross profit		$945		$805

Assume that counting errors caused the ending inventory in 2018 to be understated by $50 and the ending inventory in 2019 to be overstated by $50.

1. Compute the impact of these errors on cost of goods sold for the year ended December 31, 2018, and on the inventory balance as of December 31, 2018.
2. Compute the impact of these errors on cost of goods sold for the year ended December 31, 2019, and on the inventory balance as of December 31, 2019.
3. What is the impact of these errors on cost of goods sold over the two-year period ended December 31, 2019?

Answer rating: 100% (QA)

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