Question

Wilson Ltd.’s inventory value on its Statement of Financial Position was in error in each of...

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
Business   Accounting   
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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.
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