Sylvester has a bird shop that sells canaries. Sylvester maintains accurate records on the number of birds purchased from its suppliers and the number sold to customers. The records show the following purchases and sales during 2021. Date Transactions Units Cost per Unit Total Cost January 1 Beginning inventory 37 $ 28 $ 1,036 April 14 Purchase 68 30 2,040 August 22 Purchase 118 32
Sylvester has a bird shop that sells canaries. Sylvester maintains accurate records on the number of birds purchased from its suppliers and the number sold to customers. The records show the following purchases and sales during 2021.
| Date | Transactions | Units | Cost per Unit | Total Cost | |||||
| January 1 | Beginning inventory | 37 | $ | 28 | $ | 1,036 | |||
| April 14 | Purchase | 68 | 30 | 2,040 | |||||
| August 22 | Purchase | 118 | 32 | 3,776 | |||||
| October 29 | Purchase | 83 | 34 | 2,822 | |||||
| 306 | $ | 9,674 | |||||||
| Jan. 1–Dec. 31 | Sales ($48 each) | 272 | |||||||
Sylvester uses a periodic inventory system and believes there are 34 birds remaining in ending inventory. However, Sylvester neglects to make a final inventory count at the end of the year. An employee accidentally left one of the cages open one night and 10 birds flew away, leaving only 24 birds in ending inventory. Sylvester is not aware of the lost canaries.
4. Assuming that ending inventory is correctly counted at the end of 2022, what effect will the inventory error in 2021 have on reported amounts for (a) ending inventory, (b)
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