20

Hilt Timber Company incorrectly recorded inventory in 2017. Rather than recording ending inventory as $1,750, Hilt's accounting manager entered $2,550. An inventory summary for 2017 and 2018 follows. 3 (Click the icon to view the inventory summary.) Read the requirements. Requirement a. Prepare an analysis of this error over the 2-year period, recommend any correcting entries required to correct the inventory error, and comment on the effect of the error on gross profit. Assume that Hilt discovered the error in 2018 before closing the books. Let's begin by preparing the analysis of the inventory error in the following schedule. (Use a minus sign or parentheses for any numbers to be subtracted.) 2017 2018 Beginning Inventory Beginning Inventory Purchases Purchases Available Available CHINI Ending Inventory Ending Inventory Cost of Goods Sold Cost of Goods Sold Inventory Summary 2017 2018 1,700 $ 2,550 Beginning Inventory $ Purchases 2,400 3,450 Ending Inventory 2,550 3,700 Requirements a. Prepare an analysis of this error over the 2-year period, recommend any correcting entries required to correct the inventory error, and comment on the effect of the error on gross profit. Assume that Hilt discovered the error in 2018 before closing the books. b. What correcting entries are necessary if Hilt discovered the error in 2019 after closing the books for 2018