Partial income statements for Sherwood Company summarized for a four-year period
ID: 2488743 • Letter: P
Question
Partial income statements for Sherwood Company summarized for a four-year period show the following:
An audit revealed that in determining these amounts, the ending inventory for 2013 was overstated by $14,000. The inventory balance on December 31, 2014, was accurately stated. The company uses a periodic inventory system.
Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.
An audit revealed that in determining these amounts, the ending inventory for 2013 was overstated by $14,000. The inventory balance on December 31, 2014, was accurately stated. The company uses a periodic inventory system.
Explanation / Answer
Sherwood Company Partial Income Statement ( Corrected) 2012 2013 2014 2015 Net Sales 1400000 1800000 1900000 2400000 Cost of Goods Sold 1064000 1336000 1477000 1824000 (1350000-14000) (1463000+14000) Gross Profit 336000 464000 423000 576000 2 Gross Profit Before Correction 24% 25% 23% 24% After Correction 24% 25.78% 22.26% 24%