Question

Oriole Inc. reported total assets of $6392000 and net income of $500000 for the current year. Oriole determined that inventory was understated by $137000 at the beginning of the year and $58900 at the end of the year. Ignoring income taxes, what is the corrected amount for total assets and net income for the year

Answer 1

Answer:

Income = $421900

Assets = $6450900

Explanation:

Given below are the following calculation:

The net impact of assets = 137000 - 58900 = 78100

Deduct this amount from current year income = 500000 - 78100 = $421900

When closing stock is understated by 58900 then total assets value will decrease so add this amount = 639200 + 58900 = 6450900