Reference no: EM13351436

William's Music Store reported cost of goods sold as follows:

                                                                              2011                                   2012

Beginning inventory                                        $ 54,000                          $ 64,000

Cost of goods purchased                                   847,000                          891,000

Cost of goods available for sale                       901,000                           955,000

Ending inventory                                                64,000                              55,000

Cost of goods sold                                            $837,000                          $900,000

William's have found they have made two errors:

a. 2011 ending inventory was overstated by $3,000.

b. 2012 ending inventory was understated by $9,000.

Required:

(a) Consider the errors had not been corrected, in your answer book, in tabular format as shown below show the dollar effect that the errors had on the items appearing on the financial statements listed below.

2011          2012

$ Amount $ Amount

Total assets

Shareholders' Equity

Cost of goods sold

Net profit

(b) Show the corrected Cost of Goods Sold calculations for both 2011 and 2012.