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

Exercise 54

Effect of errors in physical inventory
Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 2016, Fonda Motorcycle Shop incorrectly counted its inventory as $337,500 instead of the correct amount of $328,850.
a. State the effect of the error on the December 31, 2016, balance sheet of Fonda Motorcycle Shop.
b. State the effect of the error on the income statement of Fonda Motorcycle Shop 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