E6-10 Smart Watch Company reported the following income statement data for a 2-year period. Sales revenue Cost of goods sold Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory Cost of goods sold Gross profit 2016 $220,000 32,000 173,000 205,000 44,000 161,000 $ 59,000 2017 $250,000 44,000 202,000 246,000 52,000 194,000 $ 56,000
E6-10 Smart Watch Company reported the following income statement data for a 2-year period. Sales revenue Cost of goods sold Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory Cost of goods sold Gross profit 2016 $220,000 32,000 173,000 205,000 44,000 161,000 $ 59,000 2017 $250,000 44,000 202,000 246,000 52,000 194,000 $ 56,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Topic Video
Question
please give solutions of 2 and 3 questions
Transcribed Image Text:periodic inventory system. The inventories at January 1, 2016, and December
Smart uses a
31, 2017, are correct. However, the ending inventory at December 31, 2016, was overstated
$6,000.
Instructions
(a) Prepare correct income statement data for the 2 years. I
(b) What is the cumulative effect of the inventory error on total gross profit for the 2
years?
Explain in a letter to the president of Smart Watch Company what has hap-
pened, i.e., the nature of the error and its effect on the financial statements.
005
Transcribed Image Text:Compute
E6-10 Smart Watch Company reported the following income statement data for a 2-year
period.
Sales revenue
Cost of goods sold
Beginning inventory
Cost of goods purchased
Cost of goods available for sale
Ending inventory
Cost of goods sold
Gross profit
2016
$220,000
32,000
173,000
205,000
44,000
161,000
$ 59,000
bon
2017
$250,000
44,000
202,000
246,000
52,000
194,000
$ 56,000
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