Part V: Use the cost-of-goods-sold (COGS) model to make management decisions

1. Fill in the Cost-of-Goods-Sold Model below.

Beginning Inventory

+ ______________

= Cost of goods available

_______________

= Cost of goods sold

2. The gross profit method is widely used to estimate what item?
   1. Cost of goods sold
   2. Ending inventory
   3. Purchases
   4. Cost of goods available

Part VI: Analyze effects of inventory errors

3. If ending inventory is overstated by $10,000 in period one, how would this effect cost of goods sold, gross profit, and net income in period two?