Information about Mather is presented in E6-4. Additional data regarding the company’s sales of EZslide snowboards are provided below. Assume that Mather uses a perpetual inventory system.

Date Units Sept. 5 Sale 8 Sept. 16 Sale 48 Sept. 29 Sale 46 Totals 102 Instructions Compute ending inventory at September 30 using FIFO, LIFO, and moving-average. (Note:

For moving-average, round unit cost to three decimal places.)

*E 6-16 Dowell Hardware reported cost of goods sold as follows.

2017 2016 Beginning inventory $ 30,000 $ 20,000 Cost of goods purchased 175,000 164,000 Cost of goods available for sale 205,000 184,000 Less: Ending inventory 37,000 30,000 Cost of goods sold $168,000 $154,000 Dowell made two errors:

1. 2016 ending inventory was overstated by $2,000.

2. 2017 ending inventory was understated by $5,000.

Instructions Compute the correct cost of goods sold for each year.

*E 6-17 Sheen Company reported these income statement data for a 2-year period.

2017 2016 Sales revenue $250,000 $210,000 Beginning inventory 40,000 32,000 Cost of goods purchased 202,000 173,000 Cost of goods available for sale 242,000 205,000 Less: Ending inventory 55,000 40,000 Cost of goods sold 187,000 165,000 Gross profit $ 63,000 $ 45,000 Sheen Company uses a periodic inventory system. The inventories at January 1, 2016, and December 31, 2017, are correct. However, the ending inventory at December 31, 2016, is overstated by $8,000.
Instructions

(a) Prepare correct income statement data for the 2 years.

(b) What is the cumulative effect of the inventory error on total gross profi t for the 2 years?

(c) Explain in a letter to the president of Sheen Company what has happened—
that is, the nature of the error and its effect on the fi nancial statements.