The Hillsboro Window Tinting books show these data (in millions):

\section*{Required}

1. Prepare a perpetual inventory record for Midas, using the FIFO method. and related cost of goods in the general journal under the FIFO method. market (LCM) value of the ending inventory.

Purchased 2. Assume that Midas sold the 130 units on August 3 on account for \(\$ 22\) each. Record the sale 3. Suppose the current replacement cost of the ending inventory of this Midas store is \(\$ 750\) at December 31, 19X4. Use the answer to Requirement 1 to compute the lower-of-cost-or-.

In early \(19 \times 7\), a team of internal auditors discovered that the ending inventory of \(19 \mathrm{X} 4\) had been overstated by \(\$ 12\) million. Also, the ending inventory for \(19 \mathrm{X} 6\) had been understated by \(\$ 8\) million. The ending inventory at December 31, 19X5, was correct.
\section*{Required}
1. Prepare corrected income statements for the three years.
2. State whether each year's net income and owners' equity amounts are understated or overstated. For each incorrect figure, indicate the amount of the understatement or overstatement.

Transcribed Image Text:

Net sales revenue Cost of goods sold: Beginning inventory.. Net purchases...... Cost of goods available Less ending inventory. Cost of goods sold. Gross margin.... Operating expenses. Net income 19X6 19X5 19X4 $360 $285 $244 $ 65 $ 55 $ 70 195 135 130 260 190 200 70 65 55 190 125 145 170 160 99 113 109 76 $ 57 $ 51 $ 23