• Determine the firm's proper Cost of Goods Sold for Year 1.
• Determine the firm's proper Ending Inventory at the end of Year 2.
• Determine the firm's proper Gross Margin for Year 3.
   

Leventhal Company uses the periodic system. The firm has tentatively prepared the followed (partial) income statements and has asked you to review some accounting records related to sales and inventory transactions that occurred in these three years. Year 1 Year 2 Year 3 Sales $630 $660 $650 Begin inv $40 $50 $70 Purchases 480 490 470 (End Inv) -50 -70 -60 CGS 470 470 480 GM 160 190 170 Leventhal conducts its physical inventory in the early morning on Dec. 31 in each year so its workers can take that afternoon off. These ending inventory values are from these physical counts. The firm uses the periodic system. In reviewing the firm's inventory records, you have discovered the following items that might require adjustments to the physical counts for each year and/or the accounting records in all three years. The firm's fiscal year ends on Dec. 31. i Leventhal sold $20 worth of goods to a customer on Dec. 29, Year 1. The invoice was mailed on Jan, 2, Year 2, and the sale was recorded in the books for Year 2 on that day. The shipping terms were FOB shipping point and FedEx picked up the goods late in the afternoon on Dec. 31, Year 1. The goods arrived at customer's receiving dock on Jan. 4, Year 2. These goods had a cost of $10. Leventhal sold $30 of goods to a customer on Dec. 29, Year 2. The cost of these goods was $20. The sales terms were FOB destination. FedEx picked up goods late in the afternoon on Dec. 30, Year 2. The goods arrived on Jan. 5, Year 3. Leventhal mailed the invoice to the customer on Dec. 30, Year 2, and Leventhal recorded the sale in the books for Year 2 on that date. Leventhal bought goods from a supplier at a price of $30 on Dec. 28, Year 3. The terms of the purchase were FOB shipping point. The supplier shipped the goods on Dec. 3o, Year 3. Leventhal received the invoice from the supplier and recorded the purchase in the books for Year 4 on Jan. 2, Year 4. The goods arrived at Leventhal's receiving dock on Jan. 5, Year 4.