Exercise 9-28 (Algo) Inventory errors [LO9-7]

In 2021, the controller of Sytec Corporation discovered that $68,000 of inventory purchases were incorrectly charged to advertising expense in 2020. In addition, the 2020 year-end inventory count failed to include $43,000 of company merchandise held on consignment by Erin Brothers. Sytec uses a periodic inventory system. Other than the omission of the merchandise on consignment, the year-end inventory count was correct. The amounts of the errors are deemed to be material. Required: 1. Determine the effect of the errors on retained earnings at January 1, 2021. (Ignore income taxes.) 2. Prepare a journal entry to correct the errors.

Determine the effect of the errors on retained earnings at January 1, 2021. (Ignore income taxes.)

Retained earnings would be

by

• Record the entry to correct the errors.

• Note: Enter debits before credits.

  Event	General Journal	Debit	Credit
  1