If goods valued at 1,750 returned to a supplier are mistakenly recorded in the sales return book as 1,570, what will be the impact on gross profit?

Explanation

The goods returned were undervalued by 180 (1,750 - 1,570) in the sales return book. This leads to an overstatement of sales returns and hence understates the gross profit. The resulting effect is a decrease in gross profit by 3,320.