question archive During the taking of its physical inventory on December 31, Barry's Bike Shop incorrectly counted its inventory as $222,847 instead of the correct amount of $173,576
During the taking of its physical inventory on December 31, Barry's Bike Shop incorrectly counted its inventory as $222,847 instead of the correct amount of $173,576
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During the taking of its physical inventory on December 31, Barry's Bike Shop incorrectly counted its inventory as $222,847 instead of the correct amount of $173,576. The effect on the balance sheet and income statement would be
a.assets overstated by $49,271; retained earnings understated by $49,271; and net income statement understated by $49,271
b.assets overstated by $222,847; retained earnings understated by $173,576; and no effect on the income statement
c.assets, retained earnings, and net income all overstated by $49,271
d.assets and retained earnings overstated by $173,576; and net income understated by $222,847
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Answer:
C. Assets, retained earnings and net income all overstated by $49271.
Explanation
Inventory is overstated by $49,271 balance sheet retained earnings and non-current assets and income statement net income.
