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Bergo Bay's accounting system generated the following account balances on December $31.$ The company$$s manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll $($Factory Wages Payable$)$ has not been recorded.

Debit Credit

Cash $ $78,000$

Accounts receivable $47,000$

Raw materials inventory $28,500$

Work in process inventory $0$

Finished goods inventory $15,000$

Prepaid rent $5,000$

Accounts payable $ $10,400$

Notes payable $13,400$

Common stock $50,000$

Retained earnings $($prior year$)93,000$

Sales $174,700$

Cost of goods sold $100,000$

Factory overhead $25,000$

General and administrative expenses $43,000$

Totals $ $341,500$ $ $341,500$

These six documents must be processed to bring the accounting records up to date.

Materials requisition $10$: $ $4,500$ direct materials to Job $402$

Materials requisition $11$: $ $7,700$ direct materials to Job $404$

Materials requisition $12$: $ $1,900$ indirect materials

Labor time ticket $52$: $ $5,000$ direct labor to Job $402$

Labor time ticket $53$: $ $15,000$ direct labor to Job $404$

Labor time ticket $54$: $ $5,000$ indirect labor

Jobs $402$ and $404$ are the only jobs in process at year$-$end. The predetermined overhead rate is $100\%$ of direct labor cost.

Prepare an income statement for the year and a balance sheet as of December $31.$ Hint: Retained earnings is $$112,800$ at the end of the current year.

Assume that the $$1,900$ on materials requisition $12$ should have been direct materials charged to Job $404.$ Does this error result in overstatement or understatement of total assets?