A company's correct ending balance for the inventory account at the end of 20X1 should be $5,000, but the company incorrectly stated it as $3,000. In 20X2, the company correctly recorded its ending balance of the inventory account.
Which one of the following is true?

a) Gross profit is overstated by $2,000 in 20X1.
b) Retained earnings are understated by $2,000 in 20X2.
c) Gross profit is overstated by $2,000 in 20X2.
d) Cost of goods sold is understated by $2,000 in 20X1.

Mesa company produces wooden rocking chairs. the company has two production departments, cutting and assembly. the wood is cut and sanded in cutting and then transferred to assembly to be assembled and painted. from assembly, the chairs are transferred to finished goods inventory and then are sold.mesa has compiled the following information for the month of february: cutting department assemblydepartmentdirect materials $ 73,000 $ 13,000direct labor 73,000 108,000applied manufacturing overhead 159,000 171,000cost of goods completed and transferred out 233,000 255,000required: 1, 2, 3, & 4. prepare journal entries for the transactions in the cutting and assembly departments of mesa company. (if no entry is required for a transaction/event, select "no journal entry required" in the first account field.)