XYZ Pharmacy: Effect of Errors
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XYZ Pharmacy reported cost of goods sold as follows:
2003 2004
Beginning inventory $ 54,000 $ 64,000
Cost of goods purchased 847,000 891,000
Cost of goods available for sale 901,000 955,000
Ending inventory 64,000 55,000
Cost of goods sold $837,000 $900,000
Perkins made two errors:
(1) 2003 ending inventory was overstated by $6,000.
(2) 2004 ending inventory was understated by $15,000.
Instructions
Assuming the errors had not been corrected, indicate the dollar effect that the errors had on the items appearing on the financial statements listed below. Also indicate if the amounts are overstated (O) or understated (U).
2003 2004
Overstated/ Overstated/
Amount Understated Amount Understated
Total assets $_________ _______ $_________ _______
Stockholders' equity $_________ _______ $_________ _______
Cost of goods sold $________ _______ $_________ _______
Net income $________ _______ $_________ _______
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Solution Summary
Effects shown in excel for you.
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