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What was correct total inventory value that should be used

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Henry Corporation's inventory at December 31, 2020, included 1000 units of product XX. The bookkeeper incorrectly valued the XX inventory at $210 per unit.

Relevant per-unit data for product XX follow:

Estimated selling price: $300

Cost: $260

Replacement cost: $278

Estimated direct selling expenses: $56

Normal profit: $20

All 1,000 units are expected to be sold in 2021.

Required (show all calculations):

Problem (a) What was the correct TOTAL inventory value that should be used for product XX at December 31, 2020?

Problem (b) Was net income for 2020 overstated or understated due to the bookkeeper's mistake? By how much (ignore income tax aspects)?

Reference no: EM132776098

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