Morton Watch Company Reported the Following Income Statement Data for a 2-Year

question 112

Essay

Morton Watch Company reported the following income statement data for a 2-year period. $\begin{array}{lcc}& \underline{2016}& \underline{2017}\\ \text { Sales revenue } & \underline{\$260,000}& \underline{\$320,000}\\ \text { Cost of goods sold } &\\ \text { Beginning inventory } &32,000&44,000\\ \text { Cost of goods purchased} & \underline{193,000}& \underline{225,000}\\ \text { Cost of goods available for sale} &225,000&269,000\\ \text { Ending inventory } & \underline{44,000}& \underline{57,000}\\ \text { Cost of goods sold} & \underline{181,000}& \underline{212,000}\\ \text { Gross profit } & \underline{\$79,000}& \underline{\$108,000}\\\end{array}$
Mortan uses a periodic inventory system. The inventories at January 1 2016 and December 31 2017 are correct. However the ending inventory at December 31 2016 was overstated $5000.
Instructions
(a) Prepare correct income statement data for the 2 years.
(b) What is the cumulative effect of the inventory error on total gross profit for the 2 years?

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Definitions:

Nutrition Counseling Model

An approach in health care that focuses on assisting individuals in making and sustaining dietary changes to improve health outcomes through personalized, targeted advice.

Dietary Goals

Objectives set to achieve a specific nutritional outcome, often relating to improved health or weight management.

Problem Solver

A person or tool that identifies issues and devises methods to resolve them effectively.

Involving Phase

A stage in a process that encompasses direct engagement and participation of stakeholders or participants.