Explain the manner in which the error made would affect the prior year and current year pretax income amounts. Also determine the effects if the prior year ending inventory were overstated by $50,000 instead of understated.

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Chapter 7, Problem 9ME

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Explain the manner in which the error made would affect the prior year and current year pretax income amounts. Also determine the effects if the prior year ending inventory were overstated by $50,000 instead of understated.

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