The Finish Line, Inc. reported the following items in its fiscal 2008 financial report (dollars in millions).

Assume that counting errors caused the ending inventory in 2007 to be understated by $50 and the ending inventory in 2008 to be overstated by $50.a. Compute the impact of these errors on cost of goods sold for the year ended December 31, 2007, and on the inventory balance as of December 31, 2007.b. Compute the impact of these errors on cost of goods sold for the year ended December 31, 200, and on the inventory balance as of December 31, 2008.c. What is the impact of these errors on cost of goods sold over the two-year period ended December 31,2008?

Transcribed Image Text:

2008 2007 Sales Cost of goods sold: S1,277 S1,262 Beginning inventory $ 268 857 S1,125 $ 287 Purchases Goods available for sale Less: Ending inventory Cost of goods sold Gross profit 887 $1,174 239 268 886 S 376 906 S 371