Partial income statements for Sherwood Company summarized for a four-year period show the following: ...
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Accounting
Partial income statements for Sherwood Company summarized for a four-year period show the following:
2017
2018
2019
2020
Net Sales
$
2,000,000
$
2,400,000
$
2,500,000
$
3,000,000
Cost of Goods Sold
1,400,000
1,660,000
1,770,000
2,100,000
Gross Profit
$
600,000
$
740,000
$
730,000
$
900,000
An audit revealed that in determining these amounts, the ending inventory for 2018 was overstated by $20,000. The inventory balance on December 31, 2019, 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-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction. (Round your answers to the nearest whole percent.)
2-b. Do the results lend confidence to your corrected amounts? multiple choice
Yes
No
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