Kim Company's accountant made the following errors related to merchandise inventory in 2010: 1. The begining inventory for 2010 was overstated by $ \$ 1,900 $ due to an error in the physical count.
2. A $ \$ 1,150 $ purchase of merchandise on credit was not recorded, but the items were included in the ending inventory.
Assuming a periodic inventory system, Kim Company's 2010 cost of goods sold will be

Question

Kim Company's accountant made the following errors related to merchandise inventory in 2010: 1. The begining inventory for 2010 was overstated by $ \$ 1,900 $ due to an error in the physical count.
2. A $ \$ 1,150 $ purchase of merchandise on credit was not recorded, but the items were included in the ending inventory.
 Assuming a periodic inventory system, Kim Company's 2010 cost of goods sold will be

Quizplus · Accepted Answer

The beginning inventory was overstated by $1,900, which would initially cause the cost of goods sold (COGS) to be overstated. However, the failure to record a $1,150 purchase (while including these items in the ending inventory) would understate COGS. The net effect is an overstatement of COGS by $750 ($1,900 overstated beginning inventory - $1,150 unrecorded purchase).

Kim Company's Accountant Made the Following Errors Related to Merchandise $1,900 \$ 1,900 $1,900

Kim Company's Accountant Made the Following Errors Related to Merchandise $\$ 1,900$