1) A Company uses the periodic system and overstated Purchases by $700 in Year 5 when it recorded a purchase in the year before it should have been recorded. The company overstated Ending Inventory [EI] at the end of Year 5 by $800. Further, the firms employees undercounted EI at the end of Year 4 by $300. Ignore taxes.

a) By what amount, if any, did the Company over/understate Gross Margin for Year 4? Specify understated or overstated.

b) By what amount, if any, did the Company over/understate Gross Margin for Year 5? Specify understated or overstated.

c) By what amount, if any, did the Company over/understate Gross Margin for Year 6? Specify understated or overstated.

d) By what amount, if any, did the Company over/understate Owners Equity at the end of Year 6? Specify understated or overstated.