Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The statements of earnings for Pruitt Company summarized for a four-year period show the following (amounts in thousands of dollars): Sales revenue Cost of sales
The statements of earnings for Pruitt Company summarized for a four-year period show the following (amounts in thousands of dollars): Sales revenue Cost of sales 2018 2017 2016 2015 $ 4,025 $4,450 $4,700 $4,975 2,505 2,627 2,782 3,113 Gross profit Operating expenses 1,520 1,823 690713 1,918 738 1,862 742 Pretax earnings Income tax expense (40%) 830 1,110 1,180 1,120 332 444 472 448 498 $ 666 $ 708 $ 672 Net earnings $ An audit revealed that in determining these amounts, the ending inventory for 2016 was understated by $62. Required: 1. Revise these statements of earnings to reflect the correct amounts. (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) PRUITT COMPANY Corrected Statement of Earnings 2018 2017 2016 2015 Sales revenue Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense Net earnings 2. Did the error affect the cumulative net earnings for the four-year period? Not affected Affected O 3. What effect did the error have on the income tax expense for 2016 and 2017? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2017 2016
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started