RJ Davis Company has a calendar$-$year accounting period. The following error was discovered in April of $2023.$ This error would have affected the financial statements for $2021$ and $2022.$

The ending balance in the inventory had been overstated $($understated$)$ for $2021$ by:

$400,000$

INSTRUCTIONS:

a Compute the effect this error had on the $2022$ net income.

b Compute the effect, if any, each error had on the $2021$ balance sheet items.