Indigo Corporation reports net income of $91,780 in 2022. However, ending inventory was understated by $7,010.  What is the correct net income for 2022?The correct net income $enter the correct net income in dollars   What effect, if any, will this error have on total assets as reported in the balance sheet at December 31, 2022?Total assets in the balance sheet will be select an option                                                                        overstatedunderstated by the amount that ending inventory is select an option                                                                        understatedoverstated, $enter a dollar amount

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Asked Nov 21, 2019
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Indigo Corporation reports net income of $91,780 in 2022. However, ending inventory was understated by $7,010.
 
 
What is the correct net income for 2022?

The correct net income
  $enter the correct net income in dollars 
 
 
What effect, if any, will this error have on total assets as reported in the balance sheet at December 31, 2022?

Total assets in the balance sheet will be select an option                                                                        overstatedunderstated by the amount that ending inventory is select an option                                                                        understatedoverstated, $enter a dollar amount 
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Expert Answer

Step 1

Net income is the measure of amount that remains with an organization after every single working cost, taxes, interest and dividends (only preferred dividends) have been deducted from total revenue earned.

Step 2

Net income= $91,780

Understated amount of ending inventory= $7,010

If the amount of ending inventory is understated, the cost of goods sold be overstated. The overstated cost of goods sold might have reduced the net income.

So, correct net income for 2022 should be= $91,780 + $7,010

              ...

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