Exercise 6-12 Horner Watch Company reported the following income statement data
ID: 2405345 • Letter: E
Question
Exercise 6-12 Horner Watch Company reported the following income statement data for a 2-year period. 2013 2014 Sales revenue $211,760 $250,470 Cost of goods sold Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory 34,510 173,520 208,030 44,100 163,930 44,100 217,220 261,320 52,830 208,490 $47,830$41,980 Cost of goods sold Gross profit Horner uses a periodic inventory system. The inventories at January 1, 2013, and December 31, 2014, are correct. However, the ending inventory at December 31, 2013, was understated $6,200. (a) Prepare correct income statement data for the 2 years. 2013 2014 Sales Cost of goods sold Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory Cost of aoods soldExplanation / Answer
Income Statement
$ 2,013.00
$ 2,014.00
Sales Revenue
$ 211,760.00
$ 250,470.00
Cost of Goods sold
Beginning Inventory
$ 34,510.00
$ 50,300.00
Cost of Goods Purchased
$ 173,520.00
$ 217,220.00
Cost of Goods Available for sale
$ 208,030.00
$ 267,520.00
Ending Inventory
$ 50,300.00
$ 52,830.00
Cost of Goods sold
$ 157,730.00
$ 214,690.00
Gross Profit
$ 54,030.00
$ 35,780.00
Cumulative effect of Inventory error on total gross profit for the 2nd year
$ -
Since gross profit of year 1 was Understated and Gross profit of Year 2 was overstated with the same amount, the cumulative effect is nil.
Income Statement
$ 2,013.00
$ 2,014.00
Sales Revenue
$ 211,760.00
$ 250,470.00
Cost of Goods sold
Beginning Inventory
$ 34,510.00
$ 50,300.00
Cost of Goods Purchased
$ 173,520.00
$ 217,220.00
Cost of Goods Available for sale
$ 208,030.00
$ 267,520.00
Ending Inventory
$ 50,300.00
$ 52,830.00
Cost of Goods sold
$ 157,730.00
$ 214,690.00
Gross Profit
$ 54,030.00
$ 35,780.00