Answer to Question #233229 in Economics for Shahzeb khan

Question

Black and Blue, Inc., overlooked $100,000 of inventory at the end of the current year because it was stored temporarily in a warehouse owned by another company. Before discovering this error, the company’s income statement showed the following:

Sales . . . . . . . . . . . . . . . . . . . . . . $990,000

Cost of goods sold . . . . . . . . . . (560,000)

Gross profit . . . . . . . . . . . . . . . $430,000

Required:

Restate these figures to reflect the inclusion of the overlooked inventory.

Answer 1

Sales . . . . . . . . . . . . . . . . . . . . . . $1.990,000

Cost of goods sold . . . . . . . . . . (560,000)

Gross profit . . . . . . . . . . . . . . . $530,000