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Malcolm Lee Industries reported the following amounts in its December 31stfinancial statements: 20202021 Cost of Goods sold$271,300$288,500Ending Inventory55,80055,800 Errors were made in each year as

Malcolm Lee Industries reported the following amounts in its December 31stfinancial statements:

20202021Cost of Goods sold$271,300$288,500Ending Inventory55,80055,800

Errors were made in each year as follows: in 2020,endinginventory was overstated by $10,200while in 2021, ending inventory was understated by $6,500. Explain the impact of these errors for 2021 profit and owners' equity.

Profits will be

understated

overstated

by $.Owners' equity will be

overstated

understated

by $.

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