The CFO of the Stuart Microscope Corporation intentionally misclassified a downstream transportation expense in the...

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Accounting

The CFO of the Stuart Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $683,100 as a product cost in an accounting period when the company made 9,900 microscopes and sold 6,100 microscopes. Stuart rewards its officers with bonuses that are based on net earnings.

Required

Indicate whether the elements on the financial statements (i.e., assets, liabilities, equity, revenue, expense, and net income) would be overstated or understated as a result of the misclassification of the downstream transportation expense. Determine the amount of the overstatement or understatement for each element.

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