In its first month of operations,Blossom Companymade three purchases of merchandise in the following sequence: 200 units at $6; 250 units at $5; and 300 units at $4. There are400units on hand at the end of the period.Blossomuses a periodic inventory system.

Calculate the cost of the ending inventory and cost of goods sold under FIFO.

FIFOEnding inventory

$. enter a dollar amount

Cost of goods sold

$. enter a dollar amount

Calculate the cost of the ending inventory and cost of goods sold under weighted average.(Round weighted average cost per unit to two decimals places e.g. 52.75 and final answers to 0 decimal places e.g. 5,275.)

Weighted average

Ending inventory

$. enter a dollar amount rounded to 0 decimal places

Cost of goods sold

$. enter a dollar amount rounded to 0 decimal places

Sandhill Co.reported the following amounts for its cost of goods sold and ending inventory:

20212020Cost of goods sold

$189,000

$194,000Ending inventory

30,000

30,000

Sandhillmade two errors: (1) 2020 ending inventory was overstated by $10,500, and (2) 2021 ending inventory was understated by $9,000.

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Calculate the correct cost of goods sold and ending inventory for each year.

2021

2020

Correct ending inventory$

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$

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Correct cost of goods sold$

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$

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Describe the impact of the errors on profit for 2020 and 2021 and on owner's equity at the end of 2020 and 2021.

In 2020 profit is

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understatedoverstatedby $

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, the amount of the error in ending inventory. This error flows through to owner's equity in 2020 to produce an

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overstatementunderstatementof $

enter a dollar amount

.

In 2021 both errors have an impact. The net effect is an

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understatementoverstatementof profit by $

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. This is a result of the $10,500

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understatementoverstatementof the beginning inventory plus $

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understatementoverstatementof ending inventory.

Owner's equity in 2021 would show only an

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overstatementunderstatementof $

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. The $10,500

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overstatementunderstatementof 2020 would be offset by the $10,500

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understatementoverstatementin profit caused by the impact on beginning inventory in 2021.