Calculate the correct ending inventory

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Reference no: EM132106061

Question - Seles Hardware Limited reported the following amounts for its cost of goods sold and merchandise inventory:


2012

2011

Cost of goods sold

$170,450

$156,010

Ending inventory

38,050

32,740

Seles made two errors: (1) ending inventory for 2012 was overstated by $2,460 and (2) ending inventory for 2011 was understated by $7,076.

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

Describe the impact of the error on (1) cost of goods sold, (2) profit before income tax, (3) assets, (4) liabilities, and (5) total shareholders' equity for each of the two years.

Reference no: EM132106061

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