Redford Company Hired a New Store Manager in October 2011,who

Essay

Redford Company hired a new store manager in October 2011,who determined the ending inventory on December 31,2011,to be $50,000.In March,2012 the company discovered that the December 31,2011 ending inventory should have been $58,000.The December 31,2012,inventory was correct.Ignore income taxes.
Complete the following table to show the effects of the inventory error on the four amounts listed.Give the amount of the discrepancy and indicate whether it was overstated (O),understated (U),or had no effect (N). $$\begin{array}{l}\begin{array} { l } \text { Year } \quad \text { Ending Inventory } &\text { Cost of Goods Sold }&\text { Net Income } \\2011 \\2012\end{array}\\\end{array}$$