Bramble Corp. reported these income statement data for a 2-year period 2017 2016

Question

Bramble Corp. reported these income statement data for a 2-year period 2017 2016 Sales revenue Beginning inventory Cost of goods purchased Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross profit $256,200 39,930 212,930 252,860 57,060 195,800 $60,400 $223,560 33,610 173,260 206,870 39,930 166,940 $56,620 Bramble Corp. uses a periodic inventory system. The inventories at January 1, 2016, and December 31, 2017, are correct. However, the ending inventory at December 31, 2016, is overstated by $7,670

Explanation / Answer

Calculate Gross profit :

The cumulative effect on total gross profit for the two years is $ Nil.

2016 2017 Sales 223560 256200 Cost of goods sold Beginning inventory 33610 32260 Cost of goods purchased 173260 212930 Cost of goods available for sale 206870 245190 Less: Ending inventory 32260 57060 Cost of goods sold 174610 188130 Gross profit 48950 68070

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