Partial income statements for Murphy & Murphy (M & M) reported the following summarized amounts:

Quarter 1 Quarter 2 Quarter 3 Quarter 4
Net Sales $ 60,000 $ 59,000 $ 80,000 $ 68,000
Cost of Goods Sold 24,000 26,550 29,050 26,520
Gross Profit $ 36,000 $ 32,450 $ 50,950 $ 41,480

After these amounts were reported, M & M’s accountant determined the inventory at the end of Quarter 2 was understated by $2,950. The inventory balance at the end of the other three quarters was accurately stated.
Required:
Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.

Answer and Explanation:

According to the scenario, The presentation of the given data are as follows:-

                              Partial Income Statement

Particular  Quarter 1 amount ($)Quarter 2 amount ($)Quarter 3 amount ($)Quarter 4 amount ($)

Net Sales60,00059,00080,00068,000

Cost of sold goods24,00023,60032,00026,520

Gross Profit36,00035,40048,00041,480

                                   ($32,450 + $2,950) ($50,950 - $2,950)

Quarter 2 was understated by $2,950 at the end of the inventory.

Quarter 2 cost of sold goods

= Cost of sold goods - understated amount

= $26,550 - $2,950

= $23,600

Quarter 3 cost of sold goods

= Cost of sold goods + understated amount

= $29,050 + $2,950

= $32,000

one of the appeals of a sole proprietorship is that business expenses are kept separate from your personal income tax return

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o