Based on the data in Exercise 6-15 and assuming that cost was determined by the FIFO method, show how the merchandise inventory would appear on the balance sheet. During 2016, the accountant...

Based on the data in Exercise 6-15 and assuming that cost was determined by the FIFO method, show how the merchandise inventory would appear on the balance sheet.

During 2016, the accountant discovered that the physical inventory at the end of 2015 had been understated by $42,750. Instead of correcting the error, however, the accountant assumed that the error would balance out (correct itself) in 2016. Are there any flaws in the accountant’s assumption? Explain.