Ending Inventory Is Over Stated Due to an Error, Purchases

question 138

Short Answer

Ending inventory is over stated due to an error, purchases were verified to be correct. What is the effect on the current year's income statement?

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Definitions:

Bailee Compensation

The payment made to a bailee for the service of temporarily holding or storing the bailor's property.

Gratuitous Bailment

A legal relationship where one party, the bailor, temporarily transfers possession of an item to another, the bailee, without expectation of payment or benefit.

Bailee's Lien

The right of a bailee to retain possession of a bailor's property as security for unpaid charges related to the property.

Bailor

A person who entrusts their property into the care of another, known as the bailee, for a particular purpose.