You have been hired as the new controller for the Radiance Company. Shortly after joining the company in $2024,$ you discover the

following errors related to the $2022$ and $2023$ financial statements:

a$.$ Inventory at December $31,2022,$ was understated by $$7,700.$

b$.$ Inventory at December $31,2023,$ was overstated by $$10,700.$

c$.$ On December $31,2023,$ Inventory was purchased for $$4,700.$ The company did not record the purchase until the inventory was

paid for early in $2024.$ At that time, the purchase was recorded by a debit to purchases and a credit to cash.

The company uses a periodic inventory system.

Required:

Assuming that the errors were discovered after the $2023$ financial statements were issued, analyze the effect of the errors on

$2023$ and $2022$ cost of goods sold, net income, and retained earnings. $($Ignore income taxes.$)$

Prepare a journal entry to correct the errors.

Complete this question by entering your answers in the tabs below.

Prepare a journal entry to correct the errors.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field.

Journal entry worksheet

Record the entry to correct inventory valuation.

Note: Enter debits before credits.