Problem: Barker Co began operations 01/01/04. Financial statements for 2004 and 2005 contained the following errors:
12/31/04 12/31/05
Ending inventory $44,000 too high $52,000 too low
Depreciation Expense 28,000 too high --
Insurance Expense 20,000 too low 20,000 too high
Prepaid Insurance 20,000 too high --
In addition , on 12/31/05 fully depreciated equipment was sold for $9,600 but the sale was not recorded until 2006. No corrections have been made for any of the errors. Ignore income tax consideration.
Question: The total effect of the errors on the amount of Barker's working capital at 12/31/05 working capital is understated by how much?