Question

he following information was taken from the records of Tinker Enterprises: 2019 2018 Beginning inventory $60,000 $50,000 Cost of goods purchased 420,000 400,000 Cost of goods available for sale 480,000 450,000 Ending inventory 55,000 60,000 Cost of goods sold $425,000 $390,000 The following two errors were made in the physical inventory counts: 1. 2018 ending inventory was understated by $8,000. 2. 2019 ending inventory was overstated by $4,000. Compute the correct cost of goods sold for both 2018 and 2019.

Answer 1

Answer:

2019 -  $437,000; 2018 -  $382,000

Explanation:

The computation of the correct cost of goods sold for both 2018 and 2019 is shown below:

For 2019

= Beginning inventory + Cost of goods purchased - Ending inventory

= $68,000  + $420,000 - $51,000

= $437,000

For 2018

= Beginning inventory + Cost of goods purchased - Ending inventory

= $50,000  + $400,000 - $68,000

= $382,000

In 2019

Beginning inventory = $60,000 + $8,000 = $68,000

Ending inventory = $55,000 - $4,000 = $51,000

In 2018

Ending inventory = $60,000 + $8,000 = $68,000