Answer:
Corrected Net Income for 2011 = $290,000
Corrected Net Income for 2012 = $410,000
Explanation:
Data provided in the question:
The overstated the inventory balance for Dec 31, 2011 = $10,000
The reported Net Income for 2011 = $300,000
The reported Net Income for 2012 = $400,000
Now,
Since the inventory is overstated in the year 2011, it will be subtracted from the reported incorrect Net Income for 2011
Thus,
Corrected Net Income for 2011 = $300,000 - $10,000
= $290,000
And, for the year 2012 the overstated inventory will be added to the reported Net Income for 2012
thus,
Corrected Net Income for 2012 = $400,000 + $10,000
= $410,000
