Tuscany Timber Company incorrectly recorded inventory in 2017. Rather than recording ending inventory as $2,200. Tuscany's accounting manager entered $2,500. An inventory summary for 2017 and 2018 follows.

Required

a. Prepare an analysis of this error over the 2-year period, recommend any correcting entries required 10 correct the inventory error, and comment on the effect of the error on gross profit. Assume that Tuscany discovered the error in 2018 before closing the books.

b. What correcting entries are necessary if Tuscany discovered the error in 2019 after closing the books for 2018?

Transcribed Image Text:

2017 2018 Beginning inventory $1.400 $2.500 2 200 Purchases 3.600 Ending inventory 2 500 3,800