Question 2

Part 1

SFB Inc. reported these figures for its fiscal year (amounts in millions):

Net sales	..................................... $1,700
Cost of goods sold	...................................... 1,180
Ending inventory	......................................... 360

.:.Suppose SFB later learns that ending inventory was overstated by $10 million. What are SFB's correct amounts for (a) net sales, (b) ending inventory, (c) cost of goods sold, and gross profit?

Part 2

Suppose Stubby Inc.'s $1.9 million cost of inventory at its fiscal year-end on January 31, 2022, was understated by $0.5 million.

1. Would 2022's reported gross profit of $5.2 million be overstated, understated, or correct? What would be the correct amount of gross profit for 2022?
2. Will 2023's gross profit of $5.6 million be overstated, understated, or correct? What would be the correct amount of gross profit for 2023?