E8.8 (LO 3) (Inventory Errors) Eureka Limited has a calendar-year accounting period. The following errors were discovered in 2023. 1. The December 31, 2021 merchandise inventory had been understated by $51,000. 2. Merchandise purchased on account in 2022 was recorded on the books for the first time in February 2023, when the original invoice for the correct amount of $2,400 arrived. The merchandise had arrived on December 28, 2022, and was included in the December 31, 2022 merchandise inventory. The invoice arrived late because of a mix-up by the wholesaler. 3. Inventory, valued at $1,000, held on consignment by Eureka was included in the December 31, 2022 count. Instructions a. Calculate the effect of each error on the 2022 net income. b. Calculate the effect, if any, that each error had on the related December 31, 2022 + statement of financial position items. Net Income of 2022 Balance sheet ending 2022 1)ending inventory of 2022 is overstated 2)ending inventory is correct Omit purchase Debit purchase Net income of 2022 is overstated-cost of goods sold is too little Ending inventory overstated Retained earnings is overstated Net Income is overstated Retained earnings overstated Accounts payable understated Credit accounts payable Cost of goods sold understated 3) Beginning Inventory for 2022 is understated Net Income is overstated- The ending inventory 2022 This is a bit tricky would be correct since it is not affected by beginning since it comes from a physical count Retained earnings would be correct as well