Purchase Solution

Analysis of Inventory Errors

Not what you're looking for?

Ask Custom Question

Abco Company had $1,100, 000 of sales in each of three consecutive years 2008-2010, and it purchased merchandise costing $700,000 in each of those years. It also maintained a $280,000 physical inventory from the beginning to the end of that 3 year period. In accounting for inventory, it made an error at the end of year 2008 that caused its year-end 2008 inventory to appear on its statements as $262,000 rather than the correct $280,000.

Determine the correct amount of the company's gross profit in each of the years 2008-2010.

Purchase this Solution

Solution Summary

The solution shows the computation of correct gross profit when inventory accounting errors are made.

Solution Preview

Opening Stock + Purchases - Closing Stock = Cost of Goods Sold

Correct Cost of Goods Sold

Year 2008: 280,000 + ...

Solution provided by:
Education
  • MPhil, Madurai Kamaraj University
  • MCom, Annamalai University
  • IATA, International Air Transport Association
Recent Feedback
  • "Great explanations on how the answers were obtained."
  • "Love the way she explains everything step by step."
  • "Solutions were thoroughly explained."
  • "Excellent explanations of how problems are solved"
  • "Thanks"
Purchase this Solution


Free BrainMass Quizzes
Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.