OMEROUNDISING AND INVENTORY Inventory errors: Problem type 1 examining the beginning and ending inventory You have been asked to audit the financial statements of Taylor Company and report on your findings. counts and calculations for the current year, you find the following: Beginning inventory is understated by $11,700. Ending inventory is understated by $1,400 Management of the company wants to know the effect that the errors will have on certain financial statement items. Required: Ignoring income taxes, determine the effect that the errors will have on the following: Is the item overstated What is the amount of or understated error? Overstated Cross Profit Ending inventory Overstated Understated