Kickstand Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its

Question:

Kickstand Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 2014, Kickstand Motorcycle Shop incorrectly counted its inventory as $640,500 instead of the correct amount of $618,900.

a. State the effect of the error on the December 31, 2014, balance sheet of Kickstand Motorcycle Shop.

b. State the effect of the error on the income statement of Kickstand Motorcycle Shop for the year ended December 31, 2014.

c. If uncorrected, what would be the effect of the error on the 2015 income statement?

d. If uncorrected, what would be the effect of the error on the December 31, 2015, balance sheet?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...