Eureka Limited has a calendar-year accounting period. The following errors were discovered in 2017.
1. The December 31, 2015 merchandise inventory had been understated by $51,000.
2. Merchandise purchased on account in 2016 was recorded on the books for the first time in February 2017, when the original invoice for the correct amount of $2,400 arrived. The merchandise had arrived on December 28, 2016, and was included in the December 31, 2016 merchandise inventory. The invoice arrived late because of a mix-up by the wholesaler.
3. Inventory, valued at $1,000, held on consignment by Eureka was included in the December 31, 2016 count.
Instructions
(a) Calculate the effect of each error on the 2016 net income.
(b) Calculate the effect, if any, that each error had on the related December 31, 2016 statement of financial position items.