Crazy Rapids Co. sells canoes, kayaks, whitewater rafts, and other boating supplies. During the taking of its

Question:

Crazy Rapids Co. sells canoes, kayaks, whitewater rafts, and other boating supplies.

During the taking of its physical inventory on December 31, 2006, Crazy Rapids incorrectly counted its inventory as $117,800 instead of the correct amount of $119,750.

a. State the effect of the error on the December 31, 2006 balance sheet of Crazy Rapids.

b. State the effect of the error on the income statement of Crazy Rapids for the year ended December 31, 2006.

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...