On 31 December 20X5, Office Systems Ltd.s books showed an ending inventory valuation of $440,000. The accounts for 20X5 have been adjusted and closed. Subsequently, the bookkeeper prepared a schedule that showed that the inventory should be $552,200, not $476,000.

a.	Merchandise in store (at 40% above cost)		$	476,000
b.	Merchandise purchased, in transit (shipped FOB destination, estimated freight, not included, $650), invoice price			12,000
c.	Merchandise held for later shipment to Davis Electronics at sales price, 40% above cost (already billed to Davis Electronics)			17,500
d.	Merchandise out on consignment at sales price (cost, $10,600)			21,200
e.	Merchandise (office equipment) removed from the warehouse and now used in the companys marketing office (at cost)			17,000
f.	Merchandise out on approval, sales price = $8,500, cost = $3,400			8,500
				552,200

Income tax rate = 30% Required: 1. Review the items making up the list of inventory. Compute the correct ending inventory amount.

2. The income statement and SFP now reflect a closing inventory of $440,000. List the items on the income statement and SFP for 20X5 that should be corrected for the above errors give the amount of the error for each item affected.

Cost of Inventory: Corrected inventory, 31 December 20x5 $ 0