Confused By Error Correction

Hi all,

I'm prepping form my Financial accounting exam and I have come across a particular question and no matter how I work it out, I do not get to what it says the correct answer is in the book..Here goes!

After calculating your company's profit for 2003, you discover that

a) A non-current asset costing £50,000 has been included in the purchases account

b) Stationery costing £10,000 has been inclued as closing inventory of raw materials, instead of inventtory of stationery.  The two errors have the effect of

A) Understating gross profit by £40,000 and understating net profit by £50,000
B) Understating both gross profit and net profit by £40,000
C) Understating gross profit by £60,000 and net profit by £50,000
D) Overstating both gross profit and net profit by £60,000.

The correct answer in the book is A, which at a glance might seem obvious, but here is my problem.  Both items are included in cost of sales, so you take the £50k out of purchases and the £10k out of closing inventory, this will reduce your costs by £40k and therefore increase your Gross profit by £40k.  Fine.

But when you apply the £10k charge to the income statement for stationery and then lift it to inventory the net proifit difference comes out at £40k not £50k, below I give two quick P&L examples

                                  Inc Errors             Corrections

Sales                          750,000               750,000

Opening Inventory          40,000                 40,000
Purchases                  450,000                400,000 (non-current asset taken out)
Closing inventory         (30,000)                  (20,000) (stationery taken out)

Cost of Sales             460,000                  420,000
Gross Profit               260,000                 300,000                 

Wages                      100,000               100,000
Admin Exps                25,000                25,000
Depreciation                15,000               15,000
Stationery                                            10,000

Credit Sationery A/C to invntory           (10,000)

Net Profit                   120,000             160,000 - £40,000 DIFFERENCE NOT £50

Is it me or am I missing the point!!!! Help!!!!!