Smart Watch Company reported the following income statement data for a 2-year period.
Smat uses a periodic inventory system. The inventories at January 1, 2019, and December 31, 2020, are correct. However, the ending inventory at December 31, 2019, was overstated $6,000.
Instructions
- Prepare correct income statement data for the 2 years.
- What is the cumulative effect of the inventory error on total gross profit for the 2 years?
Solution
a.
Smart Watch Company
b.
The cumulative effect of the inventory error on total gross profit for the 2 years is zero as shown below:
