9SE_1 Question:聽New York Pool Supplie... [FREE SOLUTION]

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Chapter 6: 9SE_1 (page 359)

Question:New York Pool Supplies鈥檚 merchandise inventory data for the year ended December 31, 2019, follow:
Net Sales Revenue$ 58,000
Cost of Goods Sold:
Beginning Merchandise Inventory$ 4,900
Net Cost of Purchases 32,500
Cost of Goods Available for Sale37,400
Less: Ending Merchandise Inventory 4,700
Cost of Goods Sold32,700
Gross Profit $ 25,300
Requirements
1. Assume that the ending merchandise inventory was accidentally overstated by$1,800. What are the correct amounts for cost of goods sold and gross profit?

Short Answer

Expert verified

The correct value of COGS and gross profit is $34,500 and$23,500 respectively.

Step by step solution

Step-by-Step-SolutionStep1: Correct value of the cost of goods sold

As the ending inventory has been overstated by $1,800, so the COGS would be understated by the same amount.

So the correct value of COGS would be as follow 鈥�

$C o r r e c t v a l u e o f C O G S = C u r r e n t v a l u e + O v e r s t a t e d e n d i n g i n v e n t o r y v a l u e = $ 32, 700 + $ 1, 800 = $ 34, 500$

Correct value of gross profit

$C o r r e c t v a l u e o f g r o s s p r o f i t = N e t s a l e r e v e n u e - C o r r e c t v a l u e o f C O G S = $ 58, 000 - $ 34, 500 = $ 23, 500$

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	2019	2018	2017
Net Sales Revenue	\( 212,000	\) 161,000	\( 170,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\)22,000	\(28,000	\)41,000
Net cost of purchase	131,000	100,000	86,000
Cost of goods available for sale	153,000	128,000	127,000
Less: Ending Merchandise Inventory	34,000	22,000	28,000
Cost of goods sold	119,000	106,000	99,000
Gross Profit	93,000	55,000	71,000
Operating Expenses	63,000	28,000	39,000
Net Income	\( 30,000	\) 27,000	$ 32,000

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Short Answer

Step by step solution

Step-by-Step-SolutionStep1: Correct value of the cost of goods sold

Correct value of gross profit

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