Final answer:
If Hastings Corporation overstates its ending inventory for 2015, it will have an effect on the reported amount of cost of goods sold for 2015. The cost of goods sold will be understated because the ending inventory balance will be higher than it should be.
Step-by-step explanation:
If Hastings Corporation overstates its ending inventory for 2015, it will have an effect on the reported amount of cost of goods sold for 2015. Cost of goods sold is calculated by subtracting the ending inventory from the sum of the beginning inventory and purchases made during the year. If the ending inventory is overstated, it will result in a higher reported ending inventory balance. Consequently, the cost of goods sold will be understated because a larger inventory balance is being carried forward.
Overstating ending inventory will lead to a lower reported cost of goods sold, inflating profitability for Hastings Corporation in that financial period.
If Hastings Corporation overstates its ending inventory for 2015, it will have a direct effect on the cost of goods sold (COGS) for that year. Cost of goods sold is calculated as the beginning inventory plus purchases minus the ending inventory. An overstated ending inventory would result in a lower COGS. Consequently, it would cause the company's gross margin to appear higher than it actually is because the expenses charged against revenue are understated. This misrepresentation can affect financial analysis and potentially mislead investors by inflating profitability in the short term.