Calculate the amount by which reported earnings will change

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Question - Accounting Errors - In early January 2021, Western London Distributors discovered that its large year-end inventories of office supplies were excluded from its balance sheets for the past 2 years. Following is a summary of the office supplies on hand at the end of the 2019 and 2020 years:

Year

Office Supplies On Hand

2019

$27,300

2020

$15,200

Assume that the books have been closed for 2020 and for all prior years.

Required -

1. Calculate the amount by which reported earnings will change for 2019 and 2020 years as a result of correcting this error. Ignore any impact of income taxes.

2. Assuming that Western London Distributors has a December 31 year end, prepare the adjusting entry that the company will need to make at the beginning of 2021 to correct this error. Ignore any impact of income taxes.

Reference no: EM133158563

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