During the taking of its physical inventory on December 31, 2014, the companyv incorrectly counted its inventory as $616,500 instead of the correct amount of $635,000.

Enter all amounts as positive numbers.

a. State the effect of the error on the December 31, 2014, balance sheet of company.

Balance Sheet Items	Understated/Overstated	Amount
Merchandise Inventory	SelectUnderstatedOverstatedNo effect	$
Current Assets	SelectUnderstatedOverstatedNo effect	$
Total Assets	SelectUnderstatedOverstatedNo effect	$
Owner's Equity	SelectUnderstatedOverstatedNo effect	$

b. State the effect of the error on the income statement of company for the year ended December 31, 2014.

Income Statement Items	Overstated/Understated	Amount
Cost of Merchandise Sold	SelectOverstatedUnderstatedNo effect	$
Gross Profit	SelectOverstatedUnderstatedNo effect	$
Net Income	SelectOverstatedUnderstatedNo effect	$

c. If uncorrected, what would be the effect of the error on the 2015 income statement?

Income Statement Items	Overstated / Understated	Amount
Cost of Merchandise Sold	SelectOverstatedUnderstatedNo Effect	$
Gross Profit	SelectOverstatedUnderstatedNo Effect	$
Net Income	SelectOverstatedUnderstatedNo Effect	$