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Inventory on the balance sheet Based on the data below, how would the inventory appear on the balance sheet, assuming that the lower of cost or market is used and the cost is determined by the First-in, first-out (FIFO) method? Total cost: $248,000 Total market: $252,350 Lower-of-cost-or-market (LCM): $239,350 The inventory would appear in the section, as follows: Effect of Errors in Physical Inventory Madison River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2048, Madison incorrectly counted its inventory as $410,750 instead of the correct amount of $423,070. Enter all amounts as positive numbers. a. State the effects of the error on the December 31, 2048, balance sheet of Madison River Supply. Balance Sheet Items Understated/Overstated Amount Inventory Current Assets Total Assets Stockholders' Equity b. State the effects of the error on the income statement of Madison River Supply for the year ended December 31, 20Y8. Income Statement Items Overstated/Understated Amount Cost of Goods Sold Gross Profit $ Net Income $ C. If uncorrected, what would be the effects of the error on the 2049 income statement? Income Statement Items Overstated / Understated Amount Cost of Goods Sold Gross Profit Net Income $ d. If uncorrected, what would be the effects of the error on the December 31, 2019, balance sheet? 1. The balance sheet would be correct, because the 2048 inventory error reverses itself in 2019. 2. The income for 2049 would be understated. 3. The current assets in 2019 would be overstated. 4. The current assets in 2019 would be understated. The inventory was destroyed by fire on December 31. The following data were obtained from the accounting records: Jan. 1 Jan. 1 - Dec. 31 Inventory Purchases (net) Sales Estimated gross profit rate $350,000 2,950,000 4,440,000 35% a. Estimate the cost of the inventory destroyed. Estimated Cost of Merchandise Destroyed od b. Which method is used to estimate inventory cost in case of inventory destroyed by fire? Based on the following data, estimate the cost of the ending inventory: Sales Estimated gross profit rate $9,250,000 36% Beginning inventory Purchases (net) Merchandise available for sale $180,000 5,945,000 $6,125,000 Estimated Cost of Ending Inventory DO