The Jacobson Manufacturing Company Was Started at the Beginning of the Current

The Jacobson Manufacturing Company was started at the beginning of the current year when it acquired $200,000 from its owners. During the year, the company incurred the following costs, all for cash:
The company produced 10,000 units of product and sold 8,000 units. The average selling price was $34 per unit; all sales were for cash. 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 income statement and balance sheet by completing the following schedule:
$$\begin{array} { | l | r | } \hline \text { Direct material costs } & \$ 80,000 \\\hline \text { Direct labor costs } & 100,000 \\\hline \text { Overhead costs } & 40,000 \\\hline \text { Selling and administrative costs } & 60,000 \\\hline\end{array}$$ $$\begin{array} { | l | l | l | } \hline & \text { Scenario 1: With the error } & \text { Scenario 2: Without the error } \\\hline \text { Income statement: } & & \\\hline \text { Revenue } & & \\\hline \text { Less: Cost of goods sold } & & \\\hline \text { Gross margin } & & \\\hline \begin{array} { c } \text { Less: Selling, general, and } \\\text { administrative expenses }\end{array} & & \\\hline \text { Net income } & & \\\hline & & \\\hline \text { Balance sheet: } & & \\\hline \text { Assets } & & \\\hline \text { Cash } & & \\\hline \text { Inventory } & & \\\hline \text { Total assets } & & \\\hline \text { Equity } & & \\\hline \text { Common stock } & & \\\hline \text { Retained earnings } & & \\\hline \text { Total equity } & & \\\hline\end{array}$$