• If the beginning merchandise inventory was understated $8,000 in 2014, purchases were overstated $6,000 in 2014 and the ending merchandise inventory was overstated $10,000 in 2015. Assume that no corrections were made during 2014 or 2015. All other items in the income statement were correct.
• What affect does this have on the cost of goods sold and net income for 2014 in dollars understated or overstated?
• What affect does this have on net income and retained earnings in dollars understated or overstated for 2015?