12th Man ordered new inventory costing $4,500 FOB shipping point on December 28, Y1. The inventory arrived on January 2, Y2, at which time 12th Man recorded the purchase and a payable.

Step 2: Write out correct and recorded journal entries for each bullet, assuming 12^th Man Co uses a perpetual inventory system. Use the COGS formula to help understand the impact on count errors. Then, summarize the impact of each bullet point on assets, liabilities, and equity.

Remember that count errors in a given year affect the value of ending inventory.

Journal Entries (correct & incorrect):

COGS formula:

	Year 1	Year 2
Beginning inventory
+ Purchases
- Ending inventory
COGS

	Assets Bullet A	Liabilities Bullet A	Equity Bullet A
Y1
Y2