Exercise $9\mathrm{.}10($Algo$)$ Effects of inventory error LO $9\mathrm{.}2$

Assume that the ending inventory of a merchandising firm is understated by $$28,900.$

Required:

a$.$ By how much and in what direction $($overstated or understated$)$ will the firm's cost of goods sold be misstated?

b$.$ If this error is not corrected, what effect will it have on the subsequent period's operating income?

c$.$ If this error is not corrected, what effect will it have on the total operating income of the two periods $($the period in which there is an

error and the subsequent period$)$ combined?

Complete this question by entering your answers in the tabs below.

Req A

Req $B$ and $C$

b$.$ If this error is not corrected, what effect will it have on the subsequent period's operating income?

c$.$ If this error is not corrected, what effect will it have on the total operating income of the two periods $($the period in which

there is an error and the subsequent period$)$ combined?

b$.$ Operating income will be

c$.$ Operating income will be