FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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The accountant for Suzanne Company made the following errors related to inventory in 2020:

1.

The beginning inventory for 2020 was overstated by $1,375 due to an error in the physical count.

2.

A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the ending inventory.

Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors?

 Set

Cost of Goods Sold

Gross Profit

Net Income

I.

Overstated

Understated

Understated

II.

Overstated

Understated

No effect

III.

Understated

Overstated

Overstated

IV.

No effect

No effect

No effect

 

a. 

Set I

 

b. 

Set II

 

c. 

Set III

 

d. 

Set IV

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