After preparing its draft final accounts for the year ended 31 March 2009 and its draft statement of financial position as at 31 March 2009 a business discovered that the inventory lists used to compute the value of inventory as at 31 March 2009 contained the following entry:

Required:

(a) What is wrong with this particular entry?

(b) What would the effect of the error have been on (i) the value of inventory as at 31 March 2009? (ii) the cost of goods sold for the year ended 31 March 2009? (iii) the net profit for the year ended 31 March 2009? (iv) the total for Current Assets as at 31 March 2009? (v) the Owner’s Capital as at 31 March 2009?

Transcribed Image Text:

Inventory item Y 4003 Number 100 Cost per unit 1.39 Total cost 1,390