The employees of Olford Furniture Company made an error when they performed the periodic inventory count at year end, October 31, 2014. Part of one warehouse was not counted and therefore was not included in inventory. (Assume the error is not material, so the October 31, 2014, financial statements were not corrected.)
Required
1. Indicate the effect of the inventory error on cost of goods sold, gross margin, and net income for the year ended October 31, 2014.
2. Will the error affect cost of goods sold, gross margin, and net income in 2015? If so, what will be the effect?