For each of the following independent scenarios, indicate the effect of the error (if any) on: 

i. 2020 net income 

ii. 2021 net income 

iii. 2021 closing retained earnings 

The company uses the periodic system of inventory and its fiscal year-end is December 31. Ignore income tax effects. 

a. Your analysis of inventory indicates that inventory at the end of 2020 was overstated by $15,000 due to an inventory count error. Inventory at the end of 2021 was correctly stated.

b. Invoices in the amount of $24,000 for inventory received in December 2020 were not entered on the books in 2020. They were recorded as purchases in January 2021 when they were paid. The goods were counted in the 2020 inventory count and included in ending inventory on the 2020 financial statements.

c. Goods received on consignment amounting to $37,000 were included in the physical count of goods at the end of 2021 and included in ending inventory on the 2021 financial statements.