E6-9 Delhi Hardware
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Determine the amount of the ending inventory by applying the lower of cost or market basis.
E6-9 Delhi Hardware reported cost of goods sold as follows.
2006 2007
Beginning inventory $ 20,000 $ 30,000
Cost of goods purchased 150,000 175,000
Cost of goods available for sale 170,000 205,000
Ending inventory 30,000 35,000
Cost of goods sold $140,000 $170,000
Delhi made two errors: (1) 2006 ending inventory was overstated $2,000, and (2) 2007 ending
inventory was understated $6,000.
Instructions
Compute the correct cost of goods sold for each year.
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Solution Summary
Computation shown in excel for Delhi Hardware. The expert determines the amount of the ending inventory by applying the lower of cost of market basis.
Solution Preview
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Corrected statement
2006 2007
Beginning Inventory 20000 28000
Cost of goods ...
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