Don't give answer in image format The accountant for Suzanne Company made the following errors related to inventory in 2020:The beginning inventory for 2020 was overstated by $1,375 due to an error in thephysical count.A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in theending Inventory.1.2.Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors?Cost of Goods SoldNet IncomeUnderstatedOverstatedOverstatedUnderstatedNo effectOverstatedNo effectNo effectSet1.11.III.IV.Set IISet IVSet IIIO set IGross ProfitUnderstatedUnderstatedOverstatedNo effect

Formula:Cost of goods sold = Beginning inventory + purchases - Closing stock.Closing stock is to be…

Answered: Assuming a periodic inventory system,…

Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 59E: Effects of an Error in Ending Inventory Waymire Company prepared the partial income statements...

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Question

Don't give answer in image format

The accountant for Suzanne Company made the following errors related to inventory in 2020:
The beginning inventory for 2020 was overstated by $1,375 due to an error in the
physical count.
A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the
ending Inventory.
1.
2.
Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors?
Cost of Goods Sold
Net Income
Understated
Overstated
Overstated
Understated
No effect
Overstated
No effect
No effect
Set
1.
11.
III.
IV.
Set II
Set IV
Set III
O set I
Gross Profit
Understated
Understated
Overstated
No effect

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The accountant for Suzanne Company made the following errors related to inventory in 2020: 1. The beginning inventory for 2020 was overstated by $1,375 due to an error in the physical count. 2. A $1,650 purchase of merchandise on credit in 2020 was not recorded or included in the ending inventory. Assuming a periodic inventory system, how would Sue's cost of goods sold, gross profit, and net income be affected in 2020 by these errors? Set Cost of Goods Sold Gross Profit Net Income I. Overstated Understated Understated II. Overstated Understated No effect III. Understated Overstated Overstated IV. No effect No effect No effect a. Set I b. Set II c. Set III d. Set IV