Pool​ Supplies's merchandise inventory data for the year ended December 31 comma 2019 comDecember 31, 2019, ​follow:

Pool Supplies's merchandise inventory data for the year ended December 31 comma 2019 comDecember 31, 2019, follow:

Sales Revenue

 

$50,000

Cost of Goods Sold:

 

 

Beginning Merchandise Inventory

$3,300

 

Net Cost of Purchases

38,500

 

Cost of Goods Available for Sale

41,800

 

Less: Ending Merchandise Inventory

5,600

 

Cost of Goods Sold

 

36,200

Gross Profit

 

$13,800

Requirement 1. Assume that the ending merchandise inventory was accidentally overstated by

$ 1 comma 000$1,000.

What are the correct amounts for cost of goods sold and gross​ profit?

Cost of goods sold in 2019 would be $

37,200

.

What is the correct amount of gross​ profit?

Gross profit in 2019 would be $

12,800

.

Requirement 2. How would the inventory error affect

CaliforniaCalifornia

Pool​ Supplies's cost of goods sold and gross profit for the year ended December​ 31,

20202020 ,

if the error is not corrected in

20192019 ?

Cost of goods sold for 2020 would be

overstated

by $

1,000

.

How would the inventory error affect

CaliforniaCalifornia

Pool​ Supplies's gross profit for the year ended December​ 31,

20202020 ,

if the error is not corrected in

20192019 ?

Gross profit for 2020 would be

understated

by $

1,000

.

Explanation

Adjusted cost of goods​ sold:

​($36 comma 20036,200

​+

$ 1 comma 000$1,000​)

​=

​$37 comma 20037,200

Adjusted gross​ profit:

​($13 comma 80013,800

​-

$ 1 comma 000$1,000​)

​=

​$12 comma 80012,800