Chapter 6 Homework: Score: 0 of 5 pts E6-23 (book/static) 4 of 5 (4 complete) Ho

Question

Chapter 6 Homework: Score: 0 of 5 pts E6-23 (book/static) 4 of 5 (4 complete) Hot Bread Bakery reported net sales revenue of $44,000 and cost of goods sold of $33,000 Compute Hot Bread's correct gross profit if the company made either of the following independent accounting errors. a. Ending merchandise inventory is overstated by $8,000 b. Ending merchandise inventory is understated by $8,000. Cost of Goods Sold and Gross Profit Corrected for the Error Ending Merchandise Inventory: As Reported-- (a) overstated by $8,000 (b) Understated by $8,000 Net sales revenue Cost of goods sold Gross profit S 44,000 $ 33,000 44,000 S 44,000

Explanation / Answer

$25000

[$33000-$8000]

Note:- Overstated ending inventory results in overstated gross profit and Understated ending inventory results in understated gross profit

Ending Merchandise inventory As reported incorrect (a) Overstated by $8000 (b) Understated by $8000 Net sales revenue $44000 $44000 $44000 less: cost of goods sold $33000 $41000 [$33000+$8000]

$25000

[$33000-$8000]

Gross profit $11000 $3000 $19000

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