Morton Watch Company reported the following income statement data for a 2-year period. Mortan uses a periodic inventory system. The inventories at January 1, 2022, and December 31, 2023, are correct. However, the ending inventory at December 31, 2022, was overstated $5,000.
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?

Question

Morton Watch Company reported the following income statement data for a 2-year period.  Mortan uses a periodic inventory system. The inventories at January 1, 2022, and December 31, 2023, are correct. However, the ending inventory at December 31, 2022, was overstated $5,000.
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?

Quizplus · Accepted Answer

The Answer of Morton Watch Company reported the following income statement data for a 2-year period.  Mortan uses a periodic inventory system. The inventories at January 1, 2022, and December 31, 2023, are correct. However, the ending inventory at December 31, 2022, was overstated $5,000.
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?

Morton Watch Company Reported the Following Income Statement Data for a 2-Year