The records of Tillman Corporation's initial and unaudited accounts show the following ending inventory balances, which must be adjusted to actual costs:

	Units	Unaudited Costs
Work-in-process inventory	48,000	$ 242,880
Finished goods inventory	15,000	105,300

As the auditor, you have learned the following information. Ending work-in-process inventory is 35 percent complete with respect to conversion costs. Materials are added at the beginning of the manufacturing process, and overhead is applied at the rate of 90 percent of the direct labor costs. There was no finished goods inventory at the start of the period. The following additional information is also available:

	Units	Costs
		Direct Materials	Direct Labor
Beginning inventory (25% complete as to labor)	32,000	$ 116,640	$ 14,240
Units started	118,000
Current costs		436,860	199,600
Units completed and transferred to finished goods inventory	102,000

Required:

a. Prepare a production cost report for Tillman using the weighted-average method.

b. Show the journal entry required to correct the difference between the unaudited records and actual ending balances of Work-in-Process Inventory and Finished Goods Inventory. Debit or credit Cost of Goods Sold for any difference.

c. If the adjustment in requirement (b) is not made, will the companys income and inventories be overstated or understated?