Rulix Watch agency reported the following income explain data because that a 2-year period.

You are watching: What is the cumulative effect of the inventory error on total gross profit for the 2 years?



Sales revenue



Cost of items sold

Beginning inventory



Cost of products purchased



Cost that goods available for sale



Ending inventory



Cost of goods sold



Gross profit

$ 59,000

$ 56,000

Rulix offers a periodic inventory system. The inventories at January 1, 2013, and also December 31, 2014, space correct. However, the ending inventory in ~ December 31, 2013, was overstated $6,000.


(a) Prepare correct income statement data for the 2 years.

(b) What is the cumulative result of the perform error on full gross profit for the 2 years?

(c) define in a letter to the chairman of Rulix Watch firm what has actually happened, i.e., the nature of the error and also its impact on the gaue won statements.

Jan 27 2021 05:41 PM

1 authorized Answer


Sanjeet kanswered ~ above January 29, 2021
5Ratings,(21 Votes)
SOLUTION:-Ending inventory in ~ December 31, 2018 is overstated by $6000.It should have been $38000 (instead of offered amount that $44000). As soon as we correct this error, the will result in palliation of gross profit by $6000. Brand-new gross profit in 2018 will certainly be $53000.When the ending inventory in ~ December 31, 2018 is overstated by $6000, it will certainly mean...
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