Question

Larkspur, Inc. reports net income of $89,770 in 2017. However, ending inventory was understated by $7,100. Collapse question part (a) What is the correct net income for 2017

Answer 1

Answer:

$96,870

Explanation:

The understatement of ending inventory causes the cost of goods sold to be overstated and the gross and net income to be understated by the same amount.

If the 2017 ending inventory was understated by $7,100 then the correct net income figure for 2017 will be $7,1000 more that what was reported.

Therefore, 2017 corrected net income

= $89,770 + $7,100

= $96,870