Rulix Watch Company reported the following income stat
Question and Solution
Rulix Watch Company reported the following income statement data for a 2-year period. Rulix uses a periodic inventory
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Rulix Watch Company reported the following income statement data for a 2-year period. Rulix uses a periodic inventory system. The inventories at January 1, 2018, and December 31, 2019, are correct. However, the ending inventory at December 31, 2018, was overstated $6,000. Instructions (a) Prepare correct income statement data for the 2 years. (b) What is the cumulative effect of the inventory error on total gross profit for the 2 years? (c) Explain in a letter to the president of Rulix Watch Company what has happened, i.e., the nature of the error and its effect on the financial statements.
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