Below is information relating to Wrong Way Inc., a subsidiary of a U.S. publicly traded manufacturer of murder mystery games. The company uses the last-in, first-out (LIFO) cost flow assumption. Additional information on inventory during Year 1 includes the following: (Click the icon to view the additional information.) Requirement For each of the independent scenarios (a) through (d), indicate in the following table the effect of the accounting errors on the books of Wrong Way Inc. Specifically, identify the amount and direction of over- or understatement of inventory and income for Year 1 and Year 2. If an account requires no adjustment, indicate that the account is "correct." (If an account is correct, leave the amount cell blank. Do not enter a "0".) Year 1 Year 2 Income Inventory Income Amount Misstated? Amount Misstated? Amount a. b. C. Inventory Misstated? Amount Misstated? Beginning-of-year finished goods inventory Units finished during Year 1 End-of-year finished goods inventory Beginning-of-year work-in-process (in equivalent units") Ending work-in-process (in equivalent units") 30,000 units 270,000 units 5,000 units 45,000 units 45,000 units (*For example, 10 units that are each 40% complete are equal to 4 equivalent units.) a. One of Wrong Way's products became obsolete and worthless during Year 1, but the inventory write-down did not occur until Year 2. The cost of this inventory was $71,000. b. In the Year 1 closing inventory count, employees improperly included 200 units of finished goods that had already been sold to customers. These units had a cost of $2,800 under LIFO. C. An invoice for $14,000 of material received and used in production arrived after the year-end. Neither the purchase nor the accounts payable was recorded. However, the amount of raw materials in ending inventory was correct based on the inventory count. d. In Year 1. Wrong Way incurred the following expenditures: Factory labour $ 700,000 Materials used in manufacturing 500,000 250,000 Variable overhead Subtotal 1,450,000 Transportation cost of raw materials 110,000 Factory depreciation 1,000,000 Salary of production vice-president 105,000 Salary of marketing vice-president Advertising cost for new game Wrong Way's accountants debited only $1,450,000 into the inventory (work-in-process) account. The remainder was expensed as period costs. 85,000 170,000 $ 2,920,000