Problem 6-5A (Part Level Submission) Concord Skateshop Ltd. reports the followin

Question

Problem 6-5A (Part Level Submission) Concord Skateshop Ltd. reports the following inventory transactions for its skateboards for the month of April. The company uses the perpetual inventory system Date Apr. Beginning inventory 30 Explanation Units Unit Cost Total Cost $1,620 645 $54 43 6 Purchases 9 Sales 14 Purchases 20 Sales 28 Purchases 15 (35) 20 (25) 20 41 820 35 700 (a) Your answer is correct. Determine the cost of goods sold and cost of ending inventory using average cost. (Round answers to 2 decimal places, e.g. 1.25.) Cost of Goods Sold 2864 Cost of Ending Inventory 921

Explanation / Answer

Solution:

Part C --- If the company had not discovered the shortage,

Since the actual inventory would be 24 units and as per record it was 25 units, so the Ending Inventory is overstated by 1 Unit and the average cost of 1 unit is $36.82. Hence,

Merchandise Inventory --- OVERSTATED --- $36.82

Cost of Goods Sold ---- UNDERSTATED --- $36.82

Retained Earnings --- OVERSTATED --- $36.82

Note --- Cost of Goods Sold = Beg + Produced Units – Ending Inventory, Since ending inventory is overstated i.e. shown on higher side, the cost of goods sold Understated.

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.