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Straightarm Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/24 and 12/31/25 contained the following errors: 2024 2025 Ending inventory $15,000

Straightarm Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/24 and 12/31/25 contained the following errors:

2024

2025

Ending inventory

$15,000 understatement

$24,000 overstatement

Depreciation expense

$6,000 understatement

$12,000 understatement

  • Failed to record Unearned Revenue at 12/31/25: $7,000
  • Straightarm declared a cash dividend of $11,000 on 12/31/25. No journal entry was made in 2025. The dividend was paid on 1/3/26; Straightarm debited Retained Earnings and credited Cash.

12/31/26 Working Capital is in error by:

Select one:

a. No Error

b. $18,000

c. $29,000

d. $7,000

e. $31,000

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