Regan Company reported net income of $95,000 for Year 1 Early in Year 2, the company discovered that its Year 1 ending inventory was overstated by $5,000 Refer to Regan Company What would be the effects of the inventory errors for Year 1 a Assets and shareholders equity will be overstated by $5,000 on the statement of financial position cost of goods sold and net income will be understated by $5,000 on the statement of earnings b Assets and shareholders equity will be overstated by $5,000 on the statement of financial position, and cost of goods sold will be overstated by $5,000 on the statement of earnings thus, net income will be understated by $5,000 c Assets and shareholders equity will be understated by $5,000 on the statement of financial position, and cost of goods sold will be overstated by $5,000 on the statement of earnings thus, net income will be understated by $5,000 d Assets and shareholders equity will be overstated by $5,000 on the statement of financial position, and cost of goods sold will be understated by $5,000 on the statement of earnings thus, net income will be overstated by $5,000

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Posted on Sep 18, 2024

Regan Company reported net income of $95,000 for Year 1. Early in Year 2, the company discovered that its Year 1 ending inventory was overstated

Regan Company reported net income of $95,000 for Year 1. Early in Year 2, the company discovered that its Year 1 ending inventory was overstated by $5,000.

Refer to Regan Company. What would be the effects of the inventory errors for Year 1?

	a.	Assets and shareholders equity will be overstated by $5,000 on the statement of financial position; cost of goods sold and net income will be understated by $5,000 on the statement of earnings.
	b.	Assets and shareholders equity will be overstated by $5,000 on the statement of financial position, and cost of goods sold will be overstated by $5,000 on the statement of earnings; thus, net income will be understated by $5,000.
	c.	Assets and shareholders equity will be understated by $5,000 on the statement of financial position, and cost of goods sold will be overstated by $5,000 on the statement of earnings; thus, net income will be understated by $5,000.
	d.	Assets and shareholders equity will be overstated by $5,000 on the statement of financial position, and cost of goods sold will be understated by $5,000 on the statement of earnings; thus, net income will be overstated by $5,000.