Charles Scrab Inc

Multiple Choice

Charles Scrab Inc. has beginning inventory of $15,000, purchases of $25,000, and ending inventory of $10,000, sales of $75,000, operating expenses of $30,000, and a tax rate of 40% for 2008. An accounting clerk input the ending inventory as $12,000. What is the effect on 2008 cost of goods sold?

A) Cost of Goods Sold will be $2,000 lower.
B) Cost of Goods Sold will be $2,000 higher.
C) Cost of Goods Sold will be $1,200 higher.
D) Cost of Goods Sold will be $1,200 lower.