Question

bramble reported total asset s of and net income of for the current year. what is the corrected amount for toal assets and net income for the yeqr

Answer 1

Answer:

Total Assets

Inventory is understated by $59,300 at the end of the year which means that assets are understated by the same amount.

To rectify this therefore you;

= 6,395,000 + 59,300

= $‭6,454,300‬

Net Income

When closing inventory is understated, it will have the effect of understating income and when opening inventory is understated, income will be overstated.

This means that the income for the year is overstated by $139,000 but understated by $59,300.

Corrected income is;

= 500,000 - 139,000 + 59,300

= $420,300