Question Content Area

The accountant for the Issenock Company did not record a purchase of merchandise on credit for the current year, but the merchandise was correctly included in the ending inventory. Assuming a periodic inventory system, how would assets, liabilities, and retained earnings be affected on the year-end balance sheet?

SetAssetsLiabilitiesRetained EarningsI.No effectUnderstatedUnderstatedII.UnderstatedUnderstatedNo effectIII.No effectNo effectOverstatedIV.No effectUnderstatedOverstated

Set I

Set IV

Set II

Set III