Reference no: EM132739259
Question - Tarot Company, which does not maintain perpetual inventory records, was in process of moving to a new location at the close of its calendar year, December 31, 2015. As a consequence, some confusion prevailed in relation to the inventory cut-off, as indicated by the following:
One lot of merchandise with a cost of $4,300 was counted twice
Merchandise on hand costing $1,640 was included in the inventory although the invoice was not recorded until January 10,2016.
Merchandise in transit, shipped to the company FOB shipping point, was recorded as a purchase as of December 31, 2015 at its cost of $8,200, but was not included in the inventory
Merchandise shipped on December 31, 2015, FOB destination and received by the customer on January 4, 2016 was not included in the inventory. The cost of this merchandise was $1,750; the sale was recorded at $2,400 on December 31, 2015
Merchandise costing $4,490 was included in the inventory, although it was shipped to a customer on December 31, 2015, FOB shipping point, and the company recorded the sale at $5,900 on that date.
REQUIRED - Compute for the overstatement or understatement of Cost of Sales for 2015.