E8-10B (Inventory Errors—Periodic) Burgess Company makes the following errors during 2014.

E8-10B (Inventory Errors—Periodic) Burgess Company makes the following errors during 2014.

1. Ending inventory is understated, but purchases are recorded correctly.

2. Ending inventory is correct, but a purchase on account for 2014 was recorded in 2015.

3. Both ending inventory and purchases on account are understated for 2014. (Assume the purchase

was recorded in 2015.)

Instructions

Indicate the effect of each of these errors on working capital, current ratio (assume that the current ratio

is greater than 1), retained earnings, and net income for 2014 and 2015.