P7-3 Comparing and Contrasting the Effects of Inventory Costing Methods on Financial Statement Elements LO7-2, 7-3 Neverstop Corporation sells item A as part of its product line. Information about the beginning inventory, purchases, and sales of item A are given in the following table for the first six months of the current year. The company uses a perpetual inventory system: Purchases Number of Units Unit Cost 570 $3.90 Sales Number of Units Sales Price 370 $5.40 Date January 1 (beginning inventory) January 24 February 8 March 16 June 11 670 $4.00 370 $5.40 670 $4.00 2. Compute the gross profit for the first six months of the current year by using the FIFO costing method. (Do not round intermediate calculations and round the final answer to 2 decimal places.) Gross profit 4. Prepare journal entries to record the purchase and sale transactions, as well as the cost of sales, assuming that all sales and purchase transactions are on account and that the weighted-average method is used. (Do not round intermediate calculations and round the final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Date General Journal Debit Credit 1 January 24 1,998.00 Accounts receivable Sales 1,998.00 2 January 24 1,443.00 Cost of sales Inventory 1,443.00 3 February 08 2,680.00 Inventory Accounts payable 2,680.00 4 March 16 1,998.00 Accounts receivable Sales 1,998.00 5 5 March 16 Cost of sales 0 Inventory 6 June 11 2,680.00 Inventory Accounts payable 2,680.00 Assume that because of a clerical error, the ending inventory is reported to be 1,070 units rather than the actual number of units (1,170) on hand. 5a. If FIFO is used, calculate the amount of the understatement or overstatement in the cost of sales for the first six months of the current year. of cost of sales 5b. If FIFO is used, calculate the amount of the understatement or overstatement in the current assets at June 30 of the current year. of current assets