A.    Explain the effect of each of the following errors in the ending inventory of a retail business.

    a.    Incorrectly included 100 units of Commodity A, valued at $1 per unit, in the ending inventory; the purchase was recorded.

    b.    Incorrectly included 200 units of Commodity B, valued at $2 per unit, in the ending inventory; the purchase was not recorded.

    c.    Incorrectly excluded 300 units of Commodity C, valued at $3 per unit, from the ending inventory; the purchase was recorded.

    d.    Incorrectly excluded 400 units of Commodity D, valued at $4 per unit, from the ending inventory; the purchase was not recorded.

B.    In determining the unit cost for inventory purposes, discuss how the following items should be treated?

    a.    Freight on goods and materials purchased.

    b.    Purchase returns

    c.    Discount received