Question

Wilson Ltd.’s inventory value on its Statement of Financial Position was in error in each of the following years by the following amounts:​

Year	Error
2014	$27,000 understatement
2015	$2,000 overstatement
2016	$8,000 overstatement
2017	$19,000 understatement
2018	$12,000 overstatement

​The following table contains the net incomes as reported in each of the preceding years. Show the adjusted net income figure for each of these years, after taking the inventory corrections into account.

Year	Net income as reported	Adjusted Correct Net Income
2014	954,000
2015	739,000
2016	816,000
2017	1,003,000
2018	996,000

Answer 1

ANSWER:
Year	Net income as reported	Adjusted Correct Net Income
2014	954,000	954000+27000 = $981000
2015	739,000	739000-27000-2000 = $710000
2016	816,000	816000+2000-8000 = $810000
2017	1,003,000	1003000+8000+19000 = $1030000
2018	996,000	996000-19000-12000 = 965000
The last year closing overstatement/Understatement will also be adjusted in the current year as understatement/
Overstatement respectively because last year closing inventory will also be recorded as opening inventory in current year.