Citrin Corporation reported the following information related to 20X7 and 20X8:

The 20X7 ending inventory value used in the above presentation erroneously failed to include $200,000 of goods purchased FOB shipping point. The purchase and related accounts payable were correctly recorded by Citrin Corporation. Citrin Corporation uses a periodic inventory system.

(a) Prepare a corrected presentation of the above data.

(b) Prepare a corrected presentation of the above data, but this time assume that the company had also failed to record the purchase before 20X8 (in addition to omitting the $200,000 from 20X7 ending inventory).

(c) In part (a), does the error matter, given that the combined gross profit for both years is $3,000,000 under both the incorrect and correct presentation?

(d) In part (b), does the error matter, given that the gross profit for each year is the same under both the incorrect and correct presentation?

Transcribed Image Text:

Beginning inventory Purchases Cost of goods available for sale Less: Ending inventory 20X7 $ 634,400 1,899,990 20X8 $ 530,400 2,450,500 $2,980,900 $2,534,390 530,400 480,000 Cost of goods sold $2,003,990 $2,500,900 Sales $3,003,990 $4,500,900 Cost of goods sold 2,003,990 2,500,900 Gross profit $1,000,000 $2,000,000