Exercise 5-12 Analysis of Inventory errors LO A2 Vibrant Company had $1,030,000
ID: 2518433 • Letter: E
Question
Exercise 5-12 Analysis of Inventory errors LO A2 Vibrant Company had $1,030,000 of sales in each of three consecutive years 2016-2018, and it purchased merchandise costing $565,000 in each o those years. It also maintained a $330,000 physical nventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 invertery to appear on its statements as $310,000 rather than the 330,000 Required 1. Determine the cormect amount of the company's gross profit in each of the years 2016-2018 2. Prepare comparative income statements to show the eflect of this error on the company's cost of goods sold and gross prott for each of the years 2016-2018 Complete this questions by entering your answers in the below tabs Required 1 Required 2 Determine the cormect amount of the company's gross profit in each of the years 2016-2018. VIBRANT COMPANY Comparative incone Statamans 2018 3-year total Cost of goods sold Cost of goods sold Gross proft Required 1Explanation / Answer
CALCULATION OF THE GROSS PROFIT VIBRANT COMPANY 2016 2017 2018 Total SALES $ 10,30,000 $ 10,30,000 $ 10,30,000 $ 30,90,000 Less: Cost of Goods Sold Opening Inventory $ 3,30,000 $ 3,30,000 $ 3,30,000 $ 9,90,000 Add: Material Purchased $ 5,65,000 $ 5,65,000 $ 5,65,000 $ 16,95,000 Less: Closing Stock $ 3,30,000 $ 3,30,000 $ 3,30,000 $ 9,90,000 Cost of Goods Sold $ 5,65,000 $ 5,65,000 $ 5,65,000 $ 16,95,000 Gross Profit $ 4,65,000 $ 4,65,000 $ 4,65,000 $ 13,95,000
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