Hull Company reported the following income statement information for the current

Question

Hull Company reported the following income statement information for the current year Sales Cost of goods sold: Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory Cost of goods sold Gross profit $424,000 $153,000 287,000 440,000 158,000 282,000 $142,000 The beginning inventory balance is correct. However, the ending inventory figure was overstated by $34,000. Given this information, the correct gross profit would be: Multiple Choice $142,000 $121,000 $119,000 $176,000

Explanation / Answer

Since the ending inventory was overstated the cost of goods sold will be understated and hence the gross profit will be overstated .

the correct gross profit will be 142,000-34,000 = 108,000

or

correct ending inventory = $124,000

correct cost of goods sold = $316,000

Correct gross profit = $108,000 answer

Since the ending inventory was overstated the cost of goods sold will be understated and hence the gross profit will be overstated .

the correct gross profit will be 142,000-34,000 = 108,000

or

correct ending inventory = $124,000

correct cost of goods sold = $316,000

Correct gross profit = $108,000 answer

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