46 - E6-26 Beginning inventory $ 48,000 Net purchases $ 106,000 Goods available $ 154,000 Sales $ 200,000 x Cost ratio = Estimated COGS $ Estimated

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Unformatted text preview: E6-26 Beginning inventory $ 48,000 Net purchases $ 106,000 Goods available $ 154,000 Sales $ 200,000 x Cost ratio _____% = Estimated COGS $ __________ Estimated ending inventory $ 34,000 Show how inventory errors affect the financial statements Effects of Inventory Errors • • • Error in ending inventory impacts two periods First period Cost of goods sold Gross Profit & Net Income Second period Beginning inventory Costs of Goods sold Gross Profit & Net Income Effects of Inventory Errors Period 1 Inventory error Period 2 COGS GP & Net Inc COGS GP & Net Inc U O O U O U U O Period 1 Ending inventory overstated Period 2 Ending inventory understated ...
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This note was uploaded on 06/15/2011 for the course ACCT 23020 taught by Professor Dorff,p during the Spring '08 term at Kent State.

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