Year 1 Year 2 Sales 100,000 130,000 Purchases 40,000 45,000 Opening Inventory 20,000 30,000 Closing Inventory...

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Year 1 Year 2 Sales 100,000 130,000 Purchases 40,000 45,000 Opening Inventory 20,000 30,000 Closing Inventory 30,000 35,000 Required a) Calculate Gross Profit for both years b) Assume you would like to enhance reported profit in Year 1. You therefore decide to overstate closing inventory by $10,000 in year 1. Recalculate Gross Profit for both years c) To hide your fraud, you wish to keep your Gross Profit Margin the same for both years. Calculate what you would need to adjust closing inventory by in year 2. Year 1 Year 2 Sales 100,000 130,000 Purchases 40,000 45,000 Opening Inventory 20,000 30,000 Closing Inventory 30,000 35,000 Required a) Calculate Gross Profit for both years b) Assume you would like to enhance reported profit in Year 1. You therefore decide to overstate closing inventory by $10,000 in year 1. Recalculate Gross Profit for both years c) To hide your fraud, you wish to keep your Gross Profit Margin the same for both years. Calculate what you would need to adjust closing inventory by in year 2.