Eureka Limited has a calendar-year accounting period. The following errors were discovered in 2014.
1. The December 31, 2012 merchandise inventory had been understated by $51,000.
2. Merchandise purchased on account in 2013 was recorded on the books for the first time in February 2014, when the original invoice for the correct amount of $2,400 arrived. T he merchandise had arrived on December 28, 2013, and was included in the December 31, 2013 merchandise inventory. The invoice arrived late because of a mix-up by the wholesaler.
3. Inventory, valued at $1,000, held on consignment by Eureka was included in the December 31, 2013 count.
Instructions
(a) Calculate the effect of each error on the 2013 net income.
(b) Calculate the effect, if any, that each error had on the related December 31, 2013 statement of financial position items.