Tuscany Timber Company incorrectly recorded inventory in 2015. Rather than recording ending inventory as $ 2,200, Tuscany€™s accounting manager entered $ 2,500. An inventory­summary for 2015 and 2016 is presented below.

Required
a. Prepare an analysis of this error over the two- year period, recommend any correcting entries required to correct the inventory error, and comment on the effect of the error on gross profit. Assume that Tuscany discovered the error in 2016 before closing the books.
b. What correcting entries are necessary if Tuscany discovered the error in 2017 after closing the books for 2016?

Transcribed Image Text:

2015 2016 Beginning Inventory $1,400 $2,500 2.200 3,600 2,500 3,800 Purchasers Ending Inventory