Question

Citrin Corporation reported the following information related to 20X7 and 20X8:
		20X7		20X8
Beginning inventory		$                      634,400		$                      530,400
Purchases		1,899,990		2,450,500
Cost of goods available for sale		$                    2,534,390		$                    2,980,900
Less:  Ending inventory		530,400		480,000
Cost of goods sold		$                    2,003,990		$                    2,500,900
Sales		$                    3,003,990		$                    4,500,900
Cost of goods sold		2,003,990		2,500,900
Gross profit		$                    1,000,000		$                    2,000,000
The 20X7 ending inventory value used in the above presentation erroneously failed to include $200,000 of goods purchased FOB shipping point.  The purchase and related accounts payable were correctly recorded by Citrin Corporation.  Citrin Corporation uses a periodic inventory system.
(a)	Prepare a corrected presentation of the above data. *PLEASE EXPLAIN WHAT CHANGES MUST OCCUR WHEN YOU SOLVE THE ERROR
(b)	Prepare a corrected presentation of the above data, but this time assume that the company had also failed to record the purchase before 20X8 (in addition to omitting the $200,000 from 20X7 ending inventory). *PLEASE EXPLAIN WHAT CHANGES MUST OCCUR WHEN YOU SOLVE THE ERROR

Answer 1