Chapter 8, Problem 13P

Errors As controller of Lerner Company, which uses a periodic inventory system, you discover the following errors in the current year:

1. 1. Merchandise with a cost of $17,500 was properly included in the final inventory, but the purchase was not recorded until the following year.
2. 2. Merchandise purchases are in transit under terms of FOB shipping point. They have been excluded from the inventory, but the purchase was recorded in the current year on the receipt of the invoice of $4,300.
3. 3. Goods out on consignment have been excluded from inventory.
4. 4. Merchandise purchases under terms FOB shipping point have been omitted from the purchases account and the ending inventory. The purchases were recorded in the following year.
5. 5. Goods held on consignment from Talbert Supply Co. were included in the inventory.

Required:

For each error, indicate the effect on the ending inventory and the net income for the current year and on the net income for the following year.