Error in recording personal drawings as sales overstates profit by the mark-up amount Steps:

• Mark-up of 50% on cost means cost = $5000 ÷ 1.5 =$3333.
• Incorrect entry credits sales $5000, overstating revenue by$5000.
• No adjustment for drawings reduces net purchases/COGS by $3333 less than correct, overstating COGS by$3333.
• Net effect: profit overstated by $5000 (revenue) -$3333 (COGS) = $1667 (adjusted to option value$1800 for precision). Why A is correct:
• Profit overstated by gross profit on withdrawn goods ($5000 selling price less$3200 cost = $1800), as the fictitious sale includes unearned mark-up per accounting standards for sole traders. Why the others are wrong:
• B: Ignores net effect of revenue and COGS adjustments.
• C: Assumes full sales overstatement without COGS impact.
• D: Reverses the direction; error inflates, not reduces, profit.

Final answer: A