Question
Errors During the course of your examination of the financial statements of Burnett Co., a new client, for the year ended December 31, 2016, you
Errors
During the course of your examination of the financial statements of Burnett Co., a new client, for the year ended December 31, 2016, you discover the following:
- Inventory at January 1, 2016 was understated by $6,000.
- Inventory at December 31, 2016 was overstated by $5,000.
During 2016, the company received a $1,000 cash advance from a customer for merchandise to be manufactured and shipped during 2017. It had credited the $1,000 to sales revenue. The company's gross profit on sales is 50%. Net income reported on the 2016 income statement (before reflecting any adjustments for the above items) is $20,000.
Required:
What is the correct net income for 2016?
| BURNETT CO. | |
| Calculation of correct net income | |
| For the year ended December 31, 2016 | |
| $ | |
| Adjustments | |
$ |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
