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:
An audit revealed that in determining these amounts, the ending inventory for 2019 was overstated by $24,000. The inventory balance on December 31, 2020, was accurately stated. The company uses a periodic inventory system. 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.
2-b. Do the results lend confidence to your corrected amounts?
