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 revenueCost of goods soldBeginning inventoryCost of goods purchasedCost of goods available for saleEnding inventoryCost of goods soldGross profit2022$260,00042,000203,000245,00045,000200,000$60,0002021$230,00030,000175,000205,00042,000163,000$67,000Waterway uses a periodic inventory system. The inventories at January 1, 2021, and December 31, 2022, are correct. However, theending inventory at December 31, 2021, was overstated $4,000.

Cost of goods sold is actual cost of goods being sold to customers. Gross profit means excess of…

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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 $

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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Question

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.

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