Discuss the impact of error

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Question - Rodeo Company uses a periodic inventory system and had the following opening inventory and purchases during the month of June 2010:

Opening inventory 500 units @ $4.50/unit

June 6 800 units @ $4.40/unit

June 23 1,000 units @ $4.30/unit

Sales were made during the month as follows:

June 10 700 units @ $6.00 unit

June 26 900 units @ $6.00 unit

Inventory costing $860 was incorrectly included in the June 30, 2010 physical inventory count. These goods had been sold by June 30, 2010 but they were still in Rodeo's warehouse at June 30, 2010 awaiting delivery to the customer. Discuss the impact of this error (dollar amount and whether inventory would be over - or understated) on Rodeo's gross profit for the month of June 2010 and the month of July 2010, assuming the physical inventory count at July 31, 2010 is correct.

Reference no: EM132524128

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