Q3. Use the following information to answer Q3a & Q3b. [1 marks each for a wholly correct answer]

Rita Company sold electronic household items. At 9.00 p.m. on Thurs Dec 30, 2021, Rita Cos warehouse personnel accepted a delivery of some merchandise inventory that Rita had purchased on account. Unfortunately, Ritas accounting office closed for weekend at 4.00 p.m. that day, so the purchase was not recorded.

Q3a. Show the effect on Ritas income for 2021, and its statement of financial position as at Dec 31, 2021 if in addition to failing to record the purchase, the company also failed to count the delivery in the years ending inventory. [Show the effect using the letters O for Overstated, U for Understated, NE for No Effect and OK for OK]

A = L + OE Revenue CGS Income Retained Earnings Total Equity

Q3b. Show the effect on Ritas income for 2021, and its statement of financial position as at Dec 31, 2021 assuming that although the purchase was not recorded, the delivery was included in the count of ending inventory.

A = L + OE Revenue CGS Income Retained Earnings Total Equity