The following information appears in Molsone Company's records for the year ended December 31: Inventory, January 1 .................................. $ 325,000 Purchases ............................................. 1,150,000 Purchase returns ...................................... 40,000 Freight-in ............................................ 30,000 Sales
................................................. 1,700,000 Sales discounts ....................................... 10,000 Sales returns ......................................... 15,000 On December 31 . a physical inventory revealed that the ending inventory was only $210,000 . Molsones gross profit on net sales has remained constant at 30 percent in recent years. Molsone suspects that some inventory may have been pilfered by one of the company's employees. At December 31 . what is the estimated cost of missing inventory?
a. $75,000
b. $82,500
c. $210,000
d. $292,500
B
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If a company overstates its ending inventory balance for 2015 by $10,000, and understates its ending inventory balance for 2014 by $5,000 what are the effects on its net income for 2015 and 2014? Effect on 2015 Net Income Effect on 2014 Net Income
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