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Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its ph 31, 20
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Answer #1
Amount of error 27000 =452500-425500
a
Balance sheet items Understated/Overstated Amount
Inventory Overstated 27000
Current Assets Overstated 27000
Total Assets Overstated 27000
Stockholders' Equity Overstated 27000
b
Income statement items Understated/Overstated Amount
Cost of goods sold Understated 27000
Gross profit Overstated 27000
Net income Overstated 27000
c
Income statement items Understated/Overstated Amount
Cost of goods sold Overstated 27000
Gross profit Understated 27000
Net income Understated 27000
d
The December 31,20Y2 Balance sheet would be correct since the 20Y1 inventory error reverses itself in 20Y2
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