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Sheffield Hardware Limited reported the following amounts for its cost of goods sold and Inventory: Cost of goods sold Ending inventory 2021 $169,500 36,400 2020 $154,700 29,500

Sheffield Hardware Limited reported the following amounts for its cost of goods sold and Inventory: Cost of goods sold Ending inventory 2021 $169,500 36,400 2020 $154,700 29,500

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How do I calculate the correct amounts for this question?

 

Sheffield Hardware Limited reported the following amounts for its cost of goods sold and Inventory: Cost of goods sold Ending inventory 2021 $169,500 36,400 2020 $154,700 29,500 Sheffield made two errors in 2020. It recorded a $4,400 inventory purchase in transit at the end of 2020 that was shipped FOB destination and included this amount in ending inventory. Also during the year-end inventory count, staff forgot to count $5,000 of ending inventory that was on hand. No one discovered these errors in 2020.
Transcribed Image Text:Sheffield Hardware Limited reported the following amounts for its cost of goods sold and Inventory: Cost of goods sold Ending inventory 2021 $169,500 36,400 2020 $154,700 29,500 Sheffield made two errors in 2020. It recorded a $4,400 inventory purchase in transit at the end of 2020 that was shipped FOB destination and included this amount in ending inventory. Also during the year-end inventory count, staff forgot to count $5,000 of ending inventory that was on hand. No one discovered these errors in 2020.
Calculate the correct ending inventory and cost of goods sold amounts for each year. Ending inventory Cost of goods sold $ 2021 $ LA $ LA 2020
Transcribed Image Text:Calculate the correct ending inventory and cost of goods sold amounts for each year. Ending inventory Cost of goods sold $ 2021 $ LA $ LA 2020
Expert Solution
Step 1 Introduction

The question is based on the concept of Cost Accounting.

Cost of goods sold is calculated by adding the beginning inventory with the purchases and deducting the ending inventory from the same.

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