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1_Berkshire Incorporated uses a periodic inventory system. At the end of 2023, it...

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Accounting

1_Berkshire Incorporated uses a periodic inventory system. At the end of 2023, it missed counting some inventory items, resulting in an inventory understatement by $660,000. Assume that Berkshire has a 20% income tax rate and that this was the only error it made.
If undetected, what is the effect of this error on Berkshire's December 31,2023 balance sheet?
Multiple Choice
Assets understated by $660,000 and shareholders' equity understated by $660,000
Assets understated by $528,000 and shareholders' equity understated by $528,000
Assets understated by $660,000, liabilities understated by $132,000 and shareholders' equity understated by $528,000
None of these answer choices are correct.

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