Business, 17.04.2020 19:57 pearlielb

Poppy Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,000, and its ending inventory on December 31 was understated by $17,000. In addition, a purchase of merchandise costing $20,000 was incorrectly recorded as a $2,000 purchase. None of these errors were discovered until the next year. As a result:

Required: Using the information given in the first paragraph of this problem, read each statement and circle either UNDERSTATED or OVERSTATED as the effect of the error. Also calculate the total effect on cost of goods sold and put it in a blank in statement D.

A. Poppy's cost of goods sold for this year was UNDERSTATED or OVERSTATED because of beginning inventory.
B. Poppy's cost of goods sold for this year was UNDERSTATED or OVERSTATED because of ending inventory.
C. Poppy's cost of goods sold for this year was UNDERSTATED or OVERSTATED because of purchases.
D. Total cost of goods sold for this year was UNDERSTATED or OVERSTATED by.
E. Net income for this year was UNDERSTATED or OVERSTATED.

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Poppy Co. uses a periodic inventory system. Beginning inventory on January 1 was understated by $30,...