The following income statement was prepared for Frame Supplies for Year 1.

FRAME SUPPLIES

Income Statement

For the Year Ended December 31, Year 1

Sales

Cost of goods sold

Gross margin

Operating expenses

Net income

$ 75,150

(33,940)

41,210

(9,260)

$ 31,950

During the year-end audit, the following errors were discovered:

Print

References

1. A $1,999 payment for repairs was erroneously charged to the Cost of Goods Sold account. (Assume that the perpetual inventory system is used.)
2. Sales to customers for $2,233 at December 31, Year 1, were not recorded in the books for Year 1. Also, the $1,470 cost of goods sold was not recorded.
3. A mathematical error was made in determining ending inventory. Ending inventory was understated by $766. (The Inventory account was mistakenly written down to the Cost of Goods Sold account.)

Required

Determine the effect, if any, of each of the errors on the following items. Give the dollar amount of the effect and whether it would overstate (O), understate (U), or not affect (leave blank) the account. The first item for each error is recorded as an example.

Give the dollar amount of the effect and state whether the payment made for repairs erroneously charged of $1,999 to the Cost of Goods Sold account would overstate (O), understate (U), or not affect (leave blank) the account. The first item of the error is recorded as an example. (Input the amount as a positive value.)