Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 50

Effect of errors in physical inventory
Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2016, Missouri River Supply incorrectly counted its inventory as $233,400 instead of the correct amount of $238,600.
a. State the effect of the error on the December 31, 2016, balance sheet of Missouri River Supply.
b. State the effect of the error on the income statement of Missouri River Supply for the year ended December 31, 2016.
c. If uncorrected, what would be the effect of the error on the 2017 income statement
d. If uncorrected, what would be the effect of the error on the December 31, 2017, balance sheet