When the records of Debra Hanson Corporation were reviewed at the close of 2021, the following errors were discovered. For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement, an understatement, or had no effect on net income for the years 2020 and 2021.   2020 2021 Item Over-statement Under-statement No Effect Over-statement Under-statement No Effect 1. Failure to record amortization of patent in 2021.             2. Failure to record the correct amount of ending 2020 inventory. The amount was understated because of an error in calculation.             3. Failure to record merchandise purchased in 2020. Merchandise was also omitted from ending inventory in 2020 but was not yet sold.             4. Failure to record accrued interest on notes payable in 2020; that amount was recorded when paid in 2021.             5. Failure to reflect supplies on hand on balance sheet at end of 2020.

Question

When the records of Debra Hanson Corporation were reviewed at the close of 2021, the following errors were discovered. For each item, indicate by a check mark in the appropriate column whether the error resulted in an overstatement, an understatement, or had no effect on net income for the years 2020 and 2021.

 
2020
2021
Item
Over-statement
Under-statement
No Effect
Over-statement
Under-statement
No Effect
1. Failure to record amortization
 of patent in 2021.
 
 
 
 
 
 
2. Failure to record the correct
 amount of ending 2020
 inventory. The amount was
 understated because of an
 error in calculation.
 
 
 
 
 
 

3. Failure to record merchandise
 purchased in 2020.
 Merchandise was also omitted
 from ending inventory in 2020
 but was not yet sold.

 
 
 
 
 
 
4. Failure to record accrued
 interest on notes payable in
 2020; that amount was
 recorded when paid in 2021.
 
 
 
 
 
 
5. Failure to reflect supplies on
 hand on balance sheet at end
 of 2020.

 

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