Question

Need help with income statement (corrected) and compute the gross profit percentage for each year before and after the correcrion.

Partial income statements for Sherwood Company summarized for a four-year period show the following: Net Sales Cost of Goods Sold Gross Profit 2015 $1,700,000 1,241,000 $ 459,000 2016 $2,100,000 1,512,000 $588,000 2017 $2,200,000 1,628,000 $ 572,000 2018 $2,700,000 1,971,000 $ 729,000 An audit revealed that in determining these amounts, the ending inventory for 2016 was overstated by $17,000. The Inventory balance on December 31, 2017, was accurately stated. The company uses a periodic inventory system. Required:

Answer 1

SHERWOOD COMPANY
Income Statements (Before correction)
Particulars	2015	2016	2017	2018
Net Sales	1700000	2100000	2200000	2700000
Cost of Goods sold	1241000	1512000	1628000	1971000
Gross Profit	459000	588000	572000	729000
Gross Profit %age	27%	28%	26%	27%

SHERWOOD COMPANY
Income Statements (After correction)
Particulars	2015	2016	2017	2018
Net Sales	1700000	2100000	2200000	2700000
Cost of Goods sold	1241000	1529000	1611000	1971000
Gross Profit	459000	571000	589000	729000
Gross Profit %age	27%	27%	27%	27%

Gross Profit Percentages
	2015	2016	2017	2018
Before the correction	27%	28%	26%	27%
After the correction	27%	27%	27%	27%