Question
Goldfinch Inc. reported net incomes for the last three years as follows: 2018, $ 62,000; 2019, $ 63,000; 2020, $ 60,000 In reviewing the accounts
Goldfinch Inc. reported net incomes for the last three years as follows:
2018, $ 62,000; 2019, $ 63,000; 2020, $ 60,000 In reviewing the accounts in 2021 (after the books for the prior year had been closed), you find that the following errors have been made:
2018 2019 2020
Overstatement of ending inventory $ 7,000 $ 8,500 $ 4,000
Understatement of accrued advertising expense 1,100 2,000 1,200
Instructions:
a) Calculate corrected net income for 2018: $____________________
b) Calculate corrected net income for 2019: $____________________
c) Calculate corrected net income for 2020: $____________________
d) Prepare the entry required in 2021 to correct the books. Ignore income taxes.
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