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Homework answers / question archive / P7-9 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-7 [The following information applies to the questions displayed below
P7-9 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-7
[The following information applies to the questions displayed below.]
The income statement for Pruitt Company summarized for a four-year period shows the following:
2016 2017 2018 2019Sales revenue$2,041,000$2,456,000$2,709,000$2,980,000Cost of goods sold 1,501,000 1,614,000 1,778,000 2,110,000Gross profit 540,000 842,000 931,000 870,000Expenses 475,000 503,000 522,000 533,000Pretax income 65,000 339,000 409,000 337,000Income tax expense (30%) 19,500 101,700 122,700 101,100Net income$45,500$237,300$286,300$235,900
An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $13,000. The company uses a periodic inventory system.
P7-9 Part 2
2. Compute the gross profit percentage for each year before the correction and after the correction. (Round your answers to the nearest whole percent.)
