After preparing its draft income statement for the year ended 31 March 2024 and draft balance sheet as at the same date, a business discovered that the inventory lists used to compute the value of inventory as at 31 March 2024 contained the following entry:

Required

(a) What is wrong with this particular entry?

(b) What would the effect of the error have been on (i) the value of inventory as at 31 March 2024?
(ii) the cost of goods sold for the year ended 31 March 2024?
(iii) the net profit for the year ended 31 March 2024?
(iv) the total for Current Assets as at 31 March 2024?
(v) the Owner’s Capital as at 31 March 2024?

Transcribed Image Text:

Inventory item K604 Number 200 Cost per unit 2.62 Total cost 5,240