Kris Inc discovered the followingerrors after the 2008 financial statements were issued:
a. A major supplier shipped inventory valued at $8,550 to Kris onconsignment. This merchandise was mistakenly included in theinventory taken by Kris on December 31 2007. (Goods shipped onconsignment are the property of the consignor and should beincluded in its inventory)
b.Kris renewed its liability insurance policy on 1 October 2007,paying a $36,000 premium and debiting Insurance expense. No furtherentries have been made. The premium purchased insurance coveragefor a period of 36 months
c. Repair expense was debited at the time equipment was purchasedfor $100,000 on Jan 8 2008. The equipment has a life of 5 years;its salvage value is considered immaterial. Kris use straight linedepreciation method.
1.. Prepare journal entries to correct these errors, ignoretaxes
2. Assuming that these errors remained uncorrected, explain theireffect on the 2009 financial statements issued by Kris