Question: Elko Inc. uses a periodic inventory control system. During Elko's inventory count on December 31, 2017, $200,000 of the inventory was counted twice, in error.

Elko Inc. uses a periodic inventory control system. During Elko's inventory count on December 31, 2017, $200,000 of the inventory was counted twice, in error. Elko reported inventory of $1,550,000 on December 31, 2016 and during the year it purchased $4,500,000 of inventory. The count on December 31, 2017 reported $1,900,000 of inventory, including the counting error. What is the effect of the counting error on net income for the year ended December 31, 2017 and on the amount of inventory reported on the on December 31, 2017? Explain your answer.

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