Fireplace Company reported the following amounts in its financial statements:

In making the physical counts of inventory, the following errors were made:
• Inventory on December 31, 2014: overstated $8,100
• Inventory on December 31, 2015: understated $ 10,800

Required:
For each of the preceding financial statement items-(a), (b), (c), and (d)-prepare a schedule similar to the following and show the adjustments that would have been necessary to correct the reported amounts.

Analysis Component:
What is the error in the aggregate net income for the three-year period that resulted from the inventory errors?

Transcribed Image Text:

Financial Statements For Year Ended December 31 2015 2014 (a) Cost of goods sold.. (b) Net income.. (c) Total current assets.. (d) Equity $102,600 87,400 133,000 152,000 2016 s 98,015 91,955 131,475 168,000 106,400 105,635 138,250 158,000 2014 2015 2016 Cost of goods sold: Reported.. Adjustments: Dec. 31/14 error.. Dec. 31/15 error.... Corrected....