Effect of Errors in Physical Inventory Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $405,480 instead of the correct amount of $417,640. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 20Y2, balance sheet of Missouri River Supply.

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Business

Jeffery Humphrey

20 February, 13:04

Effect of Errors in Physical Inventory Missouri River Supply Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its physical inventory on December 31, 20Y2, Missouri River Supply incorrectly counted its inventory as $405,480 instead of the correct amount of $417,640. Enter all amounts as positive numbers. a. State the effect of the error on the December 31, 20Y2, balance sheet of Missouri River Supply.

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Beckham Bradshaw · Answer 1

The computation of the difference amount would be

= Correct amount of inventory - incorrect amount of inventory

= $417,640 - $405,480

= $12,160

Balance Sheet Items Understated / Overstated Amount

Merchandise Inventory Understated $12,160

Current Assets Understated $12,160

Total Assets Understated $12,160

Owner's Equity Understated $12,160