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How do compute impact of the errors on cost of goods sold

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Reference no: EM132698035

The Finish Line Inc. reported the following items in its fiscal 2014 financial report (dollars in millions):

                                     2014             2013

Sales                       $1,821       $1,670

Cost of goods sold:

Beginning inventory       $304         $244

Purchases                   1,276        1,183

Goods available for sale $1,580      $1,427

Less: Ending inventory 343              304

Cost of goods sold 1,237               1,123

Gross profit            $584                  $547

Assume that counting errors caused the ending inventory in 2013 to be understated by $50 and the ending inventory in 2014 to be overstated by $50.

Problem 1: Compute the impact of these errors on cost of goods sold for the year ended December 31, 2014, and on the inventory balance as of December 31, 2014.

Reference no: EM132698035

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