Partially correct answer. Your answer is partially correct. Try again. On January 10, 2019, Sheffield Corp. sold merchandise on account to Concord Co. for $21,600, n/30. On February 9, Concord Co. gave Sheffield Corp. a 12% promissory note in settlement of this account. Prepare the journal entry to record the sale and the settlement of the account receivable. (Omit cost of goods sold entries.) (

c. Understated by $31,000.

Explanation:

To calculate understatement, we use the following method

Understatement of beginning inventory understate = $30,000

Cost of inventory understate = $17,000

Using this, we have

Understatement of beginning inventory understates (–) cost of goods sold and the understatement of ending inventory overstates (+) cost of goods sold. Also, the understatement of purchases understates (–) cost of goods sold:–= $30,000 + 17,000 – 18,000

= ($20,000 – 2,000)

= –$31,000

As understatement of cost of goods sold by Poppy Co.