Question

Question 6 Oriole Company reported the following amounts for its cost of goods sold and ending inventory: 2021 2020 Cost of goods sold $170,000 $175,000 Ending inventory 30,000 30,000 Oriole made two errors: (1) 2020 ending inventory was overstated by $10,500, and (2) 2021 ending inventory was understated by $9,000. Calculate the correct cost of goods sold and ending inventory for each year. 2021 2020 Correct ending inventory $enter a dollar amount $enter a dollar amount Correct cost of goods sold $enter a dollar amount $enter a dollar amount Describe the impact of the errors on profit for 2020 and 2021 and on owner’s equity at the end of 2020 and 2021. In 2020 profit is select an option by $enter a dollar amount , the amount of the error in ending inventory. This error flows through to owner’s equity in 2020 to produce an select an option of $enter a dollar amount . In 2021 both errors have an impact. The net effect is an select an option of profit by $enter a dollar amount . This is a result of the $10,500 select an option of the beginning inventory plus $enter a dollar amount select an option of ending inventory. Owner’s equity in 2021 would show only an select an option of $enter a dollar amount . The $10,500 select an option of 2020 would be offset by the $10,500 select an option in profit caused by the impact on beginning inventory in 2021

Answer 1