E6-26 Measuring the effect of an inventory error [10–15 min]
Grandma Kate Bakery reported sales revenue of $52,000 and cost of goods sold
of $22,000.
Requirement
1. Compute Grandma Kate’s correct gross profit if the company made either of the
following independent accounting errors. Show your work.
a. Ending inventory is overstated by $6,000.
b. Ending inventory is understated by $6,000.
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