Labco Company reported the following partial income statement for the previous two years of operations: Labco uses a perpetual inventory system. The company accountant, while reviewing the financial records of the company noticed that the December 31, 2014 ending inventory was understated by $5,000.
Instructions
a. Prepare the correct partial income statement data for 2014 and 2015.
b. What is the cumulative effect of the inventory error on total gross profit for the two years?

Question

Labco Company reported the following partial income statement for the previous two years of operations:  Labco uses a perpetual inventory system. The company accountant, while reviewing the financial records of the company noticed that the December 31, 2014 ending inventory was understated by $5,000.
Instructions 
a. Prepare the correct partial income statement data for 2014 and 2015.
b. What is the cumulative effect of the inventory error on total gross profit for the two years?

Quizplus · Accepted Answer

The Answer of Labco Company reported the following partial income statement for the previous two years of operations:  Labco uses a perpetual inventory system. The company accountant, while reviewing the financial records of the company noticed that the December 31, 2014 ending inventory was understated by $5,000.
Instructions 
a. Prepare the correct partial income statement data for 2014 and 2015.
b. What is the cumulative effect of the inventory error on total gross profit for the two years?

Labco Company Reported the Following Partial Income Statement for the Previous