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he statement of profit and loss of Goodwill Company for the years ended December $31,$

$20$X$4$ and $20$X$3$ were as follows:

$20$X$420$X$3$

Net sales $`438,300`542,900$

Cost of goods sold:

Beginning inventory $65,90073,200$

Net purchases $398,100481,700$

Cost of goods available for sale $464,000554,900$

Ending inventory $54,30065,900$

$409,700489,000$

Gross profit $28,60053,900$

Operating expenses $31,20028,700$

Net profit $($loss$)(2,600)25,200$

The company uses the periodic inventory system. A review of the accounting records revealed the

following items:

$1.$ Merchandise costing $`3,700$ was shipped to a customer on December $29,20$X$3,$ FOB destination.

The sales invoice for $`4,300$ was prepared on December $30,20$X$3.$ The goods were received by

the customer on January $3,20$X$4$ and were not included in the physical inventory on December

$31,20$X$3.$

$2.$ Merchandise costing $`2,400$ sent on consignment to a dealer was not included in the ending

inventory on December $31,20$X$4.$

$3.$ Merchandise costing $`4,100$ shipped FOB shipping point by a supplier on December $29,20$X$3$ was

received on January $6,20$X$4.$ The goods were not included in the inventory on December $31,$ but

reported as purchases on January $9,20$X$4$ when the invoice arrived.

$4.$ On December $31,20$X$3,$ goods costing $`4,400$ were shipped FOB destination by a supplier. The

goods were in transit on December $31,20$X$3$ and were not included in the physical inventory on

that day, but were reported as purchases on January $14,20$X$4$ when the invoice arrived.

$5.$ The total of one of the inventory sheets was recorded in the inventory summary sheet on December

$31,20$X$4$ as $`7,500$ instead of $`5,700.$

Required

$1.$ Determine the correct ending inventory figures for $20$X$4$ and $20$X$3.$ Itemize each correction to arrive

at the total corrections.

$2.$ Prepare revised statement of profit and loss for the years ended December $31,20$X$4$ and $20$X$3.$

$3.$ Compute the total net profit for the two$-$year period both before and after the revisions. Why are

these figures similar or different?

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