1) Elliot Corp failed to record accrued salaries for 2013, of $2,000, for 2014 of $2,100 and for 2015 of $3,900. What is the amount of the overstatement and understatement of Retained earnings at December 31, 2016?
2) Palmer Co. is evaluating the appropriate accounting for the following items;
a. Management has decided to switch from the FIFO inventory valuation method to the LIDO inventory valuation method for all inventories.
b. When the year -end physical inventory adjustment was made for the current year, the controller discovered that the prior year's physical inventory sheets for an entire warehouse were mislaid and excluded from last year's count.
c. Palmer's Custom Division manufactures large scale, custom-designed machinery on a contract basis. Management decided to switch from the completed-contract method to the percentage of completion method of accounting for long term contracts.
Identify and explain whether each of the above items is a change in accounting principle, a change in estimate or an error. Do not be brief with your responses.