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Question: Effect of Inventory Errors
During the taking of its physical inventory on December 31, 2014, Zula Company incorrectly counted its inventory as $454,260 instead of the correct amount of $408,835. Indicate the effect of the misstatement on Zula's December 31, 2014, balance sheet or income statement for the year ended December 31, 2014. For each, select if the amount is overstated or understated. Then, input the over or under amount, entered as a positive value.
Cost of merchandise sold $
Current assets $
Gross profit $Merchandise inventory $
Net income $
Owner's equity $
Total assets $
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