Help Save & Exit Submit Chapter 7 Homework Check my work 8 E7-18 (Algo) Analyzing the Effect of an Inventory Error Disclosed in an Actual Note to a Financial Statement L07-7 12.5 points Several years ago, the financial statements of Montgomery Greeting Cards, now part of Nation Salutations, contained the following note On July 1, the Company announced that it had determined that the inventory had been overstated, The overstatement of inventory was $8,726.000 Montgomery Greeting Cards reported an incorrect net income amount of $25,882.000 for the year in which the error occurred and the Income tax rate was 31.60 percent Defence Required: 1. Compute the amount of net income that Montgomery Greeting Cards reported after correcting the inventory error 2 Assume that the inventory error was not discovered. Identify the financial statement accounts that would have been incorrect ( for the year the error occurred and (b) for the subsequent year. State whether each account was understated, overstated, or had no effect. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Chapter 7 - Homework 00 8 Required: 1. Compute the amount of net income that Montgomery Greeting Cards reported after correcting the inventory error 2. Assume that the inventory error was not discovered. Identify the financial statement accounts that would have been incorrect the year the error occurred and ( for the subsequent year. State whether each account was understated, overstated, or had no 125 point Complete this question by entering your answers in the tabs below. Reference Required 1 Required 2 Compute the amount of net income that Montgomery Greeting Cards reported after correcting the inventory error. Cotrociou net income Regret Required 2 > 8 Complete this question by entering your answers in the tabs below. Required 1 Required 2 125 Duis Assume that the inventory error was not discovered. Identify the financial statement accounts that would have been incorrect (a) for the year the error occurred and (b) for the subsequent year. State whether each account was understated, overstated, or had no effect. Year of Em Subsequent Year Heferences Beginning inventory Cost of goods sold Ending inventory income tax expense Net Income Retained earnings Taxes payable 8 Complete this question by entering your answers in the tabs below. Required 1 Required 2 125 Duis Assume that the inventory error was not discovered. Identify the financial statement accounts that would have been incorrect (a) for the year the error occurred and (b) for the subsequent year. State whether each account was understated, overstated, or had no effect. Year of Em Subsequent Year Heferences Beginning inventory Cost of goods sold Ending inventory income tax expense Net Income Retained earnings Taxes payable