The following income statement was prepared for Frame Supplies for the year Year 1:

FRAME SUPPLIES
Income Statement
For the Year Ended December 31, Year 1
Sales	$	72,800
Cost of goods sold		(30,920	)
Gross margin		41,880
Operating expenses		(8,910	)
Net income	$	32,970

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

1. An $1,298 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 $2,661 at December 31, Year 1, were not recorded in the books for Year 1. Also, the $1,249 cost of goods sold was not recorded.
3. A mathematical error was made in determining ending inventory. Ending inventory was understated by $1,075. (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 (NA) 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 $1,298 to the Cost of Goods Sold account would overstate (O), understate (U), or not affect (NA) the account. The first item of the error is recorded as an example. (Input the amount as a positive value.)

Error No. 1	Amount of Error	Effect
Sales, Year 1		NA
Ending inventory, December 31, Year 1
Gross margin, Year 1
Beginning inventory, January 1, Year 2
Cost of goods sold, Year 1
Net income, Year 1
Retained earnings, December 31, Year 1
Total assets, December 31, Year 1

Give the dollar amount of the effect and state whether Sales to customers for $2,661 at December 31, Year 1, along with its cost of goods sold $1,249 not recorded in the books would overstate (O), understate (U), or not affect (NA) the account. The first item of the error is recorded as an example. (Input the amount as a positive value.)

Error No. 2	Amount of Error	Effect
Sales, Year 1	$2,661	U
Ending inventory, December 31, Year 1
Gross margin, Year 1
Beginning inventory, January 1, Year 2
Cost of goods sold, Year 1
Net income, Year 1
Retained earnings, December 31, Year 1
Total assets, December 31, Year 1

Give the dollar amount of the effect and state whether a mathematical error made in determining ending inventory understating the same by $1,075 would overstate (O), understate (U), or not affect (NA) the account. The first item of the error is recorded as an example. (Input the amount as a positive value.)

Error No. 3	Amount of Error	Effect
Sales, Year 1		NA
Ending inventory, December 31, Year 1
Gross margin, Year 1
Beginning inventory, January 1, Year 2
Cost of goods sold, Year 1
Net income, Year 1
Retained earnings, December 31, Year 1
Total assets, December 31, Year 1