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?
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?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 71BPSB
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Question
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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