Errors in Inventory CountsThe following information was taken from the records of Tinker Enterprises: Year 1Year 2Beginning Inventory$50,000$60,000Cost of goods purchased400,000420,000Cost of goods available for sale450,000480,000Ending inventory60,00055,000Cost of goods sold$390,000$425,000 The following two errors were made in the physical inventory counts:1. Year 1 ending inventory was understated by $8,0002. Year 2 ending inventory was overstated by $4,000Compute the correct cost of goods sold for both years. Year 1Year 2Cost of goods soldAnswer Answer

Cost of goods sold is the total value of goods sold during the year. It is calculated by reducing…

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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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Errors in Inventory Counts

The following information was taken from the records of Tinker Enterprises:

	Year 1	Year 2
Beginning Inventory	$50,000	$60,000
Cost of goods purchased	400,000	420,000
Cost of goods available for sale	450,000	480,000
Ending inventory	60,000	55,000
Cost of goods sold	$390,000	$425,000

The following two errors were made in the physical inventory counts:
1. Year 1 ending inventory was understated by $8,000
2. Year 2 ending inventory was overstated by $4,000

Compute the correct cost of goods sold for both years.

	Year 1	Year 2
Cost of goods sold	Answer	Answer

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