In its physical inventory count at its February 28, 2011, year end, The Orange Sprocket included inventory that was being held for another company to sell on consignment. The merchandise was sold in the next year and inventory was correctly stated at February 29, 2012.
Instructions
Ignoring income tax, indicate the effect of this error (overstated, understated, or no effect) on the following:
(a) Cash at the end of 2011 and 2012
(b) The cost of goods sold for each of 2011 and 2012
(c) Profit for each of 2011 and 2012
(d) Retained earnings at the end of 2011 and 2012
(e) at the end of 2011 and 2012
(f) The gross profit margin for each of 2011 and 2012
(g) The for each of 2011 and 2012
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