Question

Bramble Inc. reported total assets of $2405000 and net income of $331000 for the current year. Bramble determined that inventory was overstated by $23500 at the beginning of the year (this was not corrected). What is the corrected amount for total assets and net income for the year?

Answer 1

Answer:

Net income is $307,500 and Assets is $2,381,500

Explanation:

The inventory results in decreasing the net income while the overstated inventory will result in increase in the net income with the amount of overstated.

So, in this scenario, inventory increased the profits and if it is corrected then the assets will also decrease by the amount.

Therefore, correct balance is:

Net Income = Amount - Overstated amount

= $331,000 - $23,500

= $307,500

Assets = Amount - Overstated amount

= $2,405,000 - $23,500

= $2,381,500