Assume That in Year 1,the Ending Merchandise Inventory Is Overstated

question 94

Essay

Assume that in Year 1,the ending merchandise inventory is overstated by $30,000.If this is the only error in Years 1 and 2,fill in the items below,indicating which items will be understated,overstated,or correctly stated for Year 2.
$\begin{array}{llcc} \text { Ending merchandise inventory } & \text {Year 2}\underline{\quad\quad} \\ \text {Beginning merchandise inventory } & \text {Year 2}\underline{\quad\quad}\\ \text { Cost of goods sold } & \text {Year 2}\underline{\quad\quad}\\ \text { Gross profit } & \text {Year 2}\underline{\quad\quad}\\ \text {Net income } & \text {Year 2}\underline{\quad\quad}\\ \text { Ending owner's capital } & \text {Year 2}\underline{\quad\quad}\\\end{array}$

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Definitions:

Carbon Footprint

The total amount of greenhouse gases emitted directly or indirectly by an individual, organization, event, or product.

Socially Responsible

Describes businesses or practices that operate in a manner that considers the welfare of society and the environment.

Roofing Company

A business that specializes in the installation, repair, and maintenance of roofs on buildings and homes.

Deposit

A sum of money placed in a bank account or with a financial institution as a part of a transaction or as security.