Haywood Inc. reported the following information for 2019:

Beginning inventory $25,000

Ending inventory 50,000

Sales revenue 1,000,000

Cost of goods sales 620,000

A physical count of inventory at the end of the year showed that ending inventory was actually $65,000

Required:

1. What is the correct cost of goods sold and gross profit for 2019?

2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020?