JYD Corporation has determined its 2019 and 2020 net income figures to be $1,150,000 and $1,100,000, respectively. In a first time audit of the company’s financial statements, you determine the following errors: Merchandise inventory was incorrectly determined: $50,000 overstatement for 2019 and $150,000 overstatement for 2020. Revenue received in advance in 2019 of $250,000 was credited to a revenue account when received. Of the total $50,000 was earned in 2019, $120,000 was earned in 2020 and the remainder will be earned in 2021. $120,000 gain on sale of plant assets in 2020 was erroneously credited to Accumulated Profits and losses.   What is the corrected net income for the year 2020?

Cornerstones of Financial Accounting
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Author:Jay Rich, Jeff Jones
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Chapter6: Cost Of Goods Sold And Inventory
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JYD Corporation has determined its 2019 and 2020 net income figures to be $1,150,000 and $1,100,000, respectively. In a first time audit of the company’s financial statements, you determine the following errors:

  1. Merchandise inventory was incorrectly determined: $50,000 overstatement for 2019 and $150,000 overstatement for 2020.
  2. Revenue received in advance in 2019 of $250,000 was credited to a revenue account when received. Of the total $50,000 was earned in 2019, $120,000 was earned in 2020 and the remainder will be earned in 2021.
  3. $120,000 gain on sale of plant assets in 2020 was erroneously credited to Accumulated Profits and losses.

 

What is the corrected net income for the year 2020?

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