Reference no: EM132506844

Dustbringer Co. uses a periodic inventory system and performs inventory counts on December 31 each year. The following information is also available:

1. In late 2020, Dustbringer shipped goods to Edgedancer Corp. FOB destination. Dustbringer sold the goods for $7,000. Dustbringer's markup on the goods is 40% of cost. The goods arrived at Edgedancer Corp. in early 2021 at which time Dustbringer recorded the sale.
2. In late 2021, Dustbringer purchased inventory FOB shipping point for $17,500. It was shipped on this date and Dustbringer recorded the purchase when the goods were shipped but did not include them in the 2021 physical inventory count because they had not yet arrived. The goods arrived in early 2022.
   

Question 1: Assuming no correcting entries were ever made, indicate the effect of any errors on Dustbringer's 2021 net income.