1. Assume Black Widow Corporation overstated its ending inventory by $660. How does this affect cost of goods sold, cross profit, and net income in the ear it was discovered? If the error is undetected, what is the impact on cost of goods sold, gross profit, and net income for the following year? Please follow the format below.

2. Assume that Black Widow Corporation used the LCNRV to report inventory on the balance sheet. The NRV of $360 iOS less than the FIFO cost. Prepare the journal entry.

Black Widow Corporation is a small private corporation that sells desktop printers to local businesses and schools. On May 1, 2021, the following were the account balances of Black Widow Corporation: Cash Accounts Receivable Inventory (255 units) Van Furniture & Fixtures Debits 24300 9000 51000 19200 5400 Credits 900 18000 1200 Allowance for Doubtful Accounts Accumulated Depreciation (Van) Accumulated Depreciation (Furniture & Fixtures) Accounts Payable Common Shares Retained Earnings Total Credits 4800 6000 78000 108900 Total Debits 108900 During May 2021, the following transactions took place: May 1: Bought 120 desktop printers for $120 each on account. May 1: Bought a van, paying $6300 cash as a down payment and signed a 10 month $21000, 9% note payable for the balance. The company paid $300 to have its company logo painted on the side of the van. The residual value is $4800. The old van was sold for $4800; it cost $19200 and acculumated depreciation up to the date of disposal was $18000. May 10: Sold 114 printers to Groot Inc. on account. May 12 Quinn Worldwide agreed to sign a 90-day note receivable to replace a $1200 accounts receivable due that day. The interest rate on the note is 4.5%. May 20: Sold 7 printers to Hulk Inc. using a VISA card to pay for the transaction. A 2.4% service fee is charged by VISA. May 22: Sold 57 printers to Steve Rogers Public School on account. May 24: Returned for credit 3 damaged printers from Groot Inc., costing $132 each. May 28: Received payment in full from Groot Inc. for tha balance owing. May 28: Wrote off as uncollectable $1650 of accounts receivable. May 29: Paid accounts payable, $6300. May 30: Recovered an accounts receivable that was written off in April, $480. May 31: Paid operating expenses totalling $27300. May 31: Recorded depreciation on the van and the furniture & fixtures. The company uses straight-line depreciation for the van. The van is estimated to be used for 9 years. The furniture & fixtures are depreciated using the straight-line method over 3 years. There is no residual value on the furniture and fixtures. May 31: Recorded interest on the note payable. May 31: Recorded interest on the notes receivable. May 31: The company records the bad debt expense based on the aging of accounts receivables, which follows: 90+ days Number of Days Outstanding 0-30 days Accounts Receivable $16200 Estinated Percentage Uncollectable 0.6% 31-60 days $7200 2.4% 61-90 days $2250 7.2% $630 15% Other Information: 1) The selling price for each of the printers is $270. 2) Black Widow Corporation uses the FIFO method under the perpetual inventory system to account for inventory. 3) In the past, Black Widow Corporation has used the following accounts on their financial statements: Bad Debt Expense, Cost of Goods Sold, Credit Card Fee, Depreciation Expense, Gain on Sale, Interest Expense, Interest Payable, Interest Receivable, Interest Revenue, Loss on Sale, Notes Payable, Notes Receivable, Operating Expenses, Sales Returns, Sales Revenue. Not all accounts have been used each period. Current Year: Affect (select from drop down menu) Amount (type in your answer) Account Cost of Goods Sold Gross Profit Net Income Following Year: Affect (select from drop down menu) Amount (type in your answer) Account Cost of Goods Sold Gross Profit Net Income