Carter Company Reported These Income Statement Data for a 2-Year

question 94

Essay

Carter Company reported these income statement data for a 2-year period. Carter Company uses a periodic inventory system. The inventories at January 1, 2013, and December 31, 2014, are correct. However, the ending inventory at December 31, 2013, is overstated by $4,000.
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:

Popcorn

A type of corn kernel which expands and puffs up when heated, commonly enjoyed as a snack.

Potato Chips

Thin slices of potato that are fried or baked until crispy and often flavored.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in consumers' income.

Steak

A slice of meat, typically beef, cooked by grilling, frying, or broiling, and served as a main dish.