Compute the gross profit percentage for each year

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Reference no: EM13872143

Partial income statements for Sherwood Company summarized for a four-year period show the following:

An audit revealed that in determining these amounts, the ending inventory for 2013 was over-stated by $ 20,000. The inventory balance on December 31, 2014, was accurately stated. The company uses a periodic inventory system.

Required:

1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.

2. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction, rounding to the nearest percentage. Do the results lend confidence to your corrected amounts? Explain.

Reference no: EM13872143

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