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In finalizing its draft final accounts for the year ended 31 May 24Y7 and its draft balance sheet as at 31 May 24Y7, GHI Ltd

In finalizing its draft final accounts for the year ended 31 May 24Y7 and its draft balance sheet as at 31 May 24Y7, GHI Ltd found an error in the stock lists used to compute stock value as at 31 May 24Y7. The entry was:

Stock item

Number

Cost per unit

Total cost

T123

95

£3.80

£361

Required: (a) What is incorrect about this entry? (b) Assess the impact of this error on: (i) the stock valuation as at 31 May 24Y7. (ii) the cost of goods sold for the year ended 31 May 24Y7. (iii) the net profit for the year ended 31 May 24Y7. (iv) the Owner’s Equity as at 31 May 24Y7.

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