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James Supply Company Reports Gross Profit of $120,000 in 2022

Question 176

Essay

James Supply Company reports gross profit of $120,000 in 2022. The ending inventory did not include goods valued at $9,000 that James had consigned to Eli's Gift Shop.
(1) What is the correct gross profit for 2022?
(2) What impact will this error have on the balance sheet at 12/31/22?

Correct Answer:

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(1) If ending inventory is understated b...

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