For each of the following inventory errors occurring in 2018, determine the effect of the error on 2018's cost of goods sold, net income, and retained earnings. Assume that the error is not discovered until 2019 and that a periodic inventory system is used. Ignore income taxes.
U = Understated O = Overstated NE = No effect

Transcribed Image Text:

Cost of Goods Sold Retained Income 1. 2. 3. 4. 5. 6. 7. 8. Overstatement of ending inventory Overstatement of purchases Understatement of beginning inventory Freight-in charges are understated Understatement of ending inventory Understatement of purchases Overstatement of beginning inventory Understatement of purchases and understatement of ending inventory, by the same amount