Winston Auto Parts Reported the Following Information in Its Income

Essay

Winston Auto Parts reported the following information in its income statement for 2013 and 2014: Additional Information: While completing Winston's 2015 financial statements, the accountant realized that errors had been made in previous years' inventory calculations. The correct ending inventory at December 31, 2012 was $6,000, the correct ending inventory at December 31, 2013 was $4,000, and the correct ending inventory at December 31, 2014 was $7,000.
Instructions
a. Calculate the correct cost of goods sold and gross profit for 2013 and for 2014.
b. Calculate the inventory turnover for 2013 and 2014:
(i) using the originally reported information; and
(ii) using the corrected information.
c. Calculate the gross profit margin for 2013 and 2014:
(i) using the originally reported information; and
(ii) using the corrected information.
d. Explain how the errors will have caused management performance to be improperly evaluated.