Yellowstone River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of

Question:

Yellowstone River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 2014, Yellowstone River Supply incorrectly counted its inventory as $324,650 instead of the correct amount of $338,500.

a. State the effect of the error on the December 31, 2014, balance sheet of Yellowstone River Supply.

b. State the effect of the error on the income statement of Yellowstone River Supply for the year ended December 31, 2014.

c. If uncorrected, what would be the effect of the error on the 2015 income statement?

d. If uncorrected, what would be the effect of the error on the December 31, 2015, balance sheet?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...