Tafy reported the income statement data for the years ended Dec 31

2014

sales 600,000

cost of goods sold 450,000

gross profit 150,000

2013

sales 600,000

cost of goods sold 450,000

gross profit 150,000

instructions

the inventory for January 1, 2013 and December 31, 2014 are correct. However, the ending inventory for December 31, 2013 was understated by $20,000

#a prepare the gross income statement up to gross profit for the two years.

#b what is the combined effect on gross profit for the two years?

#c calculate the gross profit margin for the two years before and after the correction