Vibrant Company had $990,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $545,000

Vibrant Company had $990,000 of sales in each of three consecutive years 2016–2018, and it purchased merchandise costing $545,000 in each of those years. It also maintained a $290,000 physical inventory from the beginning to the end of that three-year period. In accounting for inventory, it made an error at the end of year 2016 that caused its year-end 2016 inventory to appear on its statements as $270,000 rather than the correct $290,000.

 
Required:
1. Determine the correct amount of the company's gross profit in each of the years 2016–2018.
2. Prepare comparative income statements to show the effect of this error on the company's cost of goods sold and gross profit for each of the years 2016−2018.

Martinez Company's ending inventory includes the following items.

Product	Units	Cost per Unit				Market per Unit
Helmets	38		$	60			$	56
Bats	31			78				84
Shoes	52			97				101
Uniforms	56			42				42

Compute the lower of cost or market for ending inventory applied separately to each product.

Per Unit Total Inventory Items Units Cost Market Cost Market LCM Applied to Items Helmets 38 $60 $56 $2,280selected answer correct $2,128selected answer correct $2,128selected answer correct Bats 31 78 84 2,418selected answer correct 2,604selected answer correct 2,418selected answer correct Shoes 52 97 101 5,044selected answer correct 5,252selected answer correct 5,044selected answer correct Uniforms 56 42 42 2,352selected answer correct 2,352selected answer correct 2,352selected answer correct $12,094 $12,336 $11,942

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