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Calculate correct cost of goods sold and ending inventory

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Question - Glacier Fishing Gear reported the following amounts for its cost of goods sold and ending inventory: Determine effects of inventory errors. 2021 2020 Cost of goods sold $170,000 $175,000 Ending inventory 30,000 30,000 Glacier made two errors: (1) 2020 ending inventory was overstated by $5,500, and (2) 2021 ending inventory was understated by $4,000.

Required -

a. Calculate the correct cost of goods sold and ending inventory for each year.

b. Describe the impact of the errors on profit for 2020 and 2021 and on owner's equity at the end of 2020 and 2021.

c. Explain why it is important that Glacier Fishing Gear correct these errors as soon as they are discovered.

Reference no: EM132886554

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