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

Question:

Fonda Motorcycle Shop sells motorcycles, ATVs, and other related supplies and accessories. During the taking of its physical inventory on December 31, 20Y1, Fonda incorrectly counted its inventory as $452,500 instead of the correct amount of $425,500.
a. State the effects of the error on the December 31, 20Y1, balance sheet of Fonda Motorcycle Shop.
b. State the effects of the error on the income statement of Fonda Motorcycle Shop for the year ended December 31, 20Y1.
c. If uncorrected, what would be the effects of the error on the 20Y2 income statement?

d. If uncorrected, what would be the effects of the error on the December 31, 20Y2, 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...

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