Rays Motorcycle Shop sells motorcycles, jet skis, and other related supplies and accessories. During the taking of

Question:

Ray’s Motorcycle Shop sells motorcycles, jet skis, and other related supplies and accessories.
During the taking of its physical inventory on December 31, 2006, Ray’s Motorcycle Shop incorrectly counted its inventory as $187,900 instead of the correct amount of $183,750.
a. State the effect of the error on the December 31, 2006 of Ray’s Motorcycle Shop.
b. State the effect of the error on the income statement of Ray’s Motorcycle Shop 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...