The Effect of Inventory Errors The accountant for Steele Company reported the following accounting treatments for several purchase transactions (FOB shipping point) that took place near December 31, 2009, the company’s year-end:

Required:
1. If Steele Company’s records reported purchases and ending inventory balances of $80,800 and $29,800, respectively, for 2009, what would the proper amounts in these accounts have been?
2. What would be the correct amount of cost of goods sold for 2009, if the beginning inventory balance on January 1, 2009, was $20,200?
3. By how much would cost of goods sold be over- or understated if the corrections in question (1) were not made?

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Date Inventory Was Shipped Was the Purchase Recorded in the Books on or before December 31, 2009? Amount Was the Inventory Counted and Included in Inventory Balance on December 31, 2009? 2009: December 26 Yes $1,100 Yes December 29 Yes 800 No December 31 No 1,800 Yes 2010: January 1 No 300 Yes January 1 Yes. 3,000 No January 1 No 600 No