The before-tax income for Fitzgerald Co. for 2018 was $101,000, and for 2019 was $77,400. However, the

Question:

The before-tax income for Fitzgerald Co. for 2018 was $101,000, and for 2019 was $77,400. However, the accountant noted that the following errors had been made.
1. Sales for 2018 included amounts of $38,200 which had been received in cash during 2018, but for which the related products were delivered in 2019. Title did not pass to the purchaser until 2019.
2. The inventory on December 31, 2018, was understated by $8,640.
3. The bookkeeper in recording interest expense for both 2018 and 2019 on bonds payable made the following entry on an annual basis.

The bonds have a face value of $250,000 and pay a stated interest rate of 6%. They were issued at a discount of $10,000 on January 1, 2018, to yield an effective-interest rate of 7%. (Assume that the effective-interest method should be used.)
4. Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2018 and 2019. Repairs in the amount of $8,000 in 2018 and $9,400 in 2019 were so charged. The company applies a rate of 10% to the balance in the Equipment account at the end of the year in its determination of depreciation charges.
Instructions
Prepare a schedule showing the determination of corrected income before taxes for 2018 and 2019.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...