(Appendix A) Calculate inventory errors. (LO 8)

Ian's Small Appliances reported cost of goods sold as follows.

Ian's made two errors:
1. 2005 ending inventory was understated by \(\$ 5,000\).
2. 2006 ending inventory was overstated by \(\$ 2,000\).
Calculate the correct cost of goods sold for 2005 and 2006.

Transcribed Image Text:

2005 2006 Beginning inventory $130,000 $ 50,000 Purchases 275,000 240,000 Cost of goods available for sale 405,000 290,000 Ending inventory 50,000 40,000 Cost of goods sold $355,000 $250,000