FirstIn Company reported a profit of $90,000 in 2013.
FirstIn Company reported a profit of $90,000 in 2013. When counting its inventory on December 31, 2013, the company forgot to include items stored in a separate room in the warehouse. As a result, ending inventory was understated by $7,000.
(a) What is the correct profit for 2013?
(b) What effect, if any, will this error have on total assets and owner’s equity reported on the balance sheet on December 31, 2013?
(c) Assuming the inventory is correctly counted on December 31, 2014, what effect, if any, will this error have on the 2014 financial statements?
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FirstIn Company reported profit of $90,000 in 2013. When counting its inventory on December 31, 2013, the company forgot to include items stored in a separate room in the warehouse. As a result, ending inventory was understated by $7,000.
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