Chapter 7, Problem 7.17EX

a)

To determine

Inventory error:

Inventory errors are sometimes caused by making mistake, in physical count, in pricing the inventory correctly, or in recognizing the transfer of title for the goods in transit. These inventory errors affect both the income statement as well as the balance sheet.

To indicate: the effect of misstatement on MRS Company in their balance sheet.

b.

To determine

To indicate: the effect of misstatement on MRS Company in their income statement.

c)

To determine

To indicate: the effect on MRS Company in their income statement on the next year if the mistake is uncorrected.

d)

To determine

To indicate: the effect on MRS Company in their balance sheet on the next year if the mistake is uncorrected.