The Carson Company was started at the beginning of the current year when it acquired $20,000 by issuing common stock to its owners.During the year,the company incurred the following cash costs:
$\begin{array}{lr}
\text { Direct material costs } & \$ 10,000 \
\text { Direct labor costs } & 8,000 \
\text { Overhead costs } & 4,000 \
\text { Selling and administrative costs } & 2,000
\end{array}$ The company produced 5,000 units of product and sold 4,500 units.The average selling price was $7.00 per unit.The accountant who prepared the firm's financial statements misclassified the selling and administrative costs as product costs.
Required:
Demonstrate the impact of the error on the company's financial statements by completing the following schedule.

Question

The Carson Company was started at the beginning of the current year when it acquired $20,000 by issuing common stock to its owners.During the year,the company incurred the following cash costs:
 $\begin{array}{lr}
\text { Direct material costs } & \$ 10,000 \
\text { Direct labor costs } & 8,000 \
\text { Overhead costs } & 4,000 \
\text { Selling and administrative costs } & 2,000
\end{array}$ The company produced 5,000 units of product and sold 4,500 units.The average selling price was $7.00 per unit.The accountant who prepared the firm's financial statements misclassified the selling and administrative costs as product costs.
Required:
Demonstrate the impact of the error on the company's financial statements by completing the following schedule.

Quizplus · Accepted Answer

The Answer of The Carson Company was started at the beginning of the current year when it acquired $20,000 by issuing common stock to its owners.During the year,the company incurred the following cash costs:
 $\begin{array}{lr}
\text { Direct material costs } & \$ 10,000 \
\text { Direct labor costs } & 8,000 \
\text { Overhead costs } & 4,000 \
\text { Selling and administrative costs } & 2,000
\end{array}$ The company produced 5,000 units of product and sold 4,500 units.The average selling price was $7.00 per unit.The accountant who prepared the firm's financial statements misclassified the selling and administrative costs as product costs.
Required:
Demonstrate the impact of the error on the company's financial statements by completing the following schedule.

The Carson Company Was Started at the Beginning of the Current