6. You wilPROBLEM:Net income for Victory Company for the years 2021 and 2022 is shown below. An audit of the accounts,however, disclosed the following errors:20212022Net income after income tax246,500 312.500Understatement of year-end inventory25.000Purchase of computer at year cnd charged to expense. Theestimated useful life is 10 years.40,000Credit purchases of merchandise not recorded but included inthe physical count at year end50,000Rent received in advance and credited to incomne18.000Unrecorded unpaid taxes at year-end,20.000QUESTIONS:1. What is the correct net income for the year 2021?2. What is the correct net income for the year 2022?

1. As it is stated that year end inventory of the year 2022 is understated by 25000, correcting this…

Answered: 1. What is the correct net income for…

Business

Accounting

1. What is the correct net income for the year 2021? 2. What is the correct net income for the year 2022?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 4RE: Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020....

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Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
Net income for Mory Company for the years 2021 and 2022 is shown below. An audit of the accounts, however, disclosed the following errors: 2021 2022 Net income after income tax 246,500 312,500 Understatement of year-end inventory 25,000 Purchase of computer at year end charged to expense. The estimated useful life is 10 years. 40,000 Credit purchases of merchandise not recorded but included in the physical count at year end 50,000 Rent received in advance and credited to income 18,000 Unrecorded unpaid taxes at year-end 20,000 QUESTIONS: What is the correct net income for the year 2021? What is the correct net income for the year 2022?
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