20 Feb Inventory ErrorsYou are the controller of a rapidl
Inventory ErrorsYou are the controller of a rapidly growing mass merchandiser. The company uses a periodicinventory system. As the company has grown and accounting systems have developed, errorshave occurred in both the physical count of inventory and the valuation of inventory on the balancesheet. You have been able to identify the following errors as of December 2008: In 2006, one section of the warehouse was counted twice. The error resulted in inventory overstatedon December 31, 2006, by approximately $45,600. In 2007, the replacement cost of some inventory was less than the FIFO value used on thebalance sheet. The inventory would have been $6,000 less on the balance sheet datedDecember 31, 2007. In 2008, the company used the gross profit method to estimate inventory for its quarterlyfinancial statements. At the end of the second quarter, the controller made a math error andunderstated the inventory by $20,000 on the quarterly report. The error was not discovereduntil the end of the year.RequiredWhat, if anything, should you do to correct each of these errors? Explain your answers.