Question

Terps Company reported total assets of $2,400,000 and net income of $320,000 for the current year. The company determined that inventory was overstated by $24,000 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:

$2,400,000 and $344,000

Explanation:

Given the above information,

the corrected amount for total assets at the end of the year would still remain $2,400,000. Reason being that the overstatement of inventory has no effect whatsoever on the asset of the company.

Also, the corrected net income for the year would be ;

= Net income for the year + Over stated inventory

= $320,000 + $24,000

= $344,000

Therefore,

The corrected amount for total assets and net income for the year are $2,400,000 and $344,000 respectively