Reference no: EM132960338

Question - Seam Patico Co. began operations on January 1, 2010. Financial statements for 2010 and 2011 contained the following errors.

Dec 31 2010 Dec 31, 2011

Ending inventory $132,000 too high $156,000 too low

Depreciation expense 84,000 too high -

Insurance expense 60,000 too low 60.000 too high

Prepaid insurance 60,000 too high -

In addition, on December 31, 2011 fully depreciated equipment was sold for $28,800 but the sale was not recorded until 2012. No corrections have been made for any of the errors Ignore income tax considerations.

Required - Find the total effect of the errors on Seam Patico's 2011 net inches?

a. understated by $ 376,800

b. understated by $ 244,800

c. Overstated by $ 115,200

d. Overstated by $ 199,200