The accountant for the Daneen Company made the following errors related to purchases of merchandise and ending inventory in 2014:
1.A $3,100 purchase of merchandise on credit early in 2015 was recorded and included in ending inventory at December 31, 2014.
2.A $2,750 purchase of merchandise on credit in 2014 was recorded, but it was not included in the end-of-year physical inventory count.
Assuming a periodic inventory system, Daneen Company's 2014 net income will be

Question

The accountant for the Daneen Company made the following errors related to purchases of merchandise and ending inventory in 2014: 
1.A $3,100 purchase of merchandise on credit early in 2015 was recorded and included in ending inventory at December 31, 2014.
2.A $2,750 purchase of merchandise on credit in 2014 was recorded, but it was not included in the end-of-year physical inventory count.
Assuming a periodic inventory system, Daneen Company's 2014 net income will be

Quizplus · Accepted Answer

The $3,100 purchase was incorrectly included in 2014 ending inventory, overstating it. The $2,750 purchase was not included in ending inventory, understating it. The net effect is an overstatement of $350 in ending inventory, leading to an overstatement of net income by the same amount.

The Accountant for the Daneen Company Made the Following Errors