Xi Pharmaceuticals

• Xi Pharmaceuticals is under investigation for misstating their cost of goods sold (COGS).
• The income statement reports $1,200,000 in COGS.
• Inventory records indicate an understatement of $150,000 in COGS.
• There are $80,000 in unrecorded purchase returns.
• $50,000 in personal purchases were included in COGS.

Requirement: Determine the correct COGS and describe the fraudulent activities detected.

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