What is the cumulative effect of the inventory error on total gross profit for the 2 years? Cumulative effect of the inventory error $

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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What is the cumulative effect of the inventory error on total gross profit for the 2 years?
Cumulative effect of the inventory error $
Transcribed Image Text:What is the cumulative effect of the inventory error on total gross profit for the 2 years? Cumulative effect of the inventory error $
Waterway 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
2022
$260,000
42,000
203,000
245,000
45,000
200,000
$60,000
2021
$230,000
30,000
175,000
205,000
42,000
163,000
$67,000
Waterway uses a periodic inventory system. The inventories at January 1, 2021, and December 31, 2022, are correct. However, the
ending inventory at December 31, 2021, was overstated $4,000.
Transcribed Image Text:Waterway 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 2022 $260,000 42,000 203,000 245,000 45,000 200,000 $60,000 2021 $230,000 30,000 175,000 205,000 42,000 163,000 $67,000 Waterway uses a periodic inventory system. The inventories at January 1, 2021, and December 31, 2022, are correct. However, the ending inventory at December 31, 2021, was overstated $4,000.
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