Excerpts from the 31 December financial statements of Tungston Ltd., before any corrections:

After these financial statements were prepared, but before they were issued for 20X7, a routine review revealed a major mathematical error in calculating 20X5 closing inventory. Instead of $9,850, closing inventory should have been $8,050. There is no income tax.

Required:
1. What entry is needed to correct the error in 20X7? Explain.
2. Restate all the above information, as appropriate, to retrospectively correct the error.
3. What disclosure of the error is needed?

Transcribed Image Text:

SCI: Cost of goods sold SFP: Inventory 20X7 $ 395,000 $ 17,250 20X6 $352,600 $ 15,450 20X5 $ 338,400 $ 9,850