For calendar 2014, Halima Corporation reported pre-tax income of $345,000.You have been made aware that the company's beginning inventory was overstated by $12,000 and ending inventory was understated by $11,000.What is Halima's corrected pre-tax income for 2014?
A)$322,000
B)$344,000
Inventory 8 - 25
C)$346,000
D)$368,000

Question

Quizplus · Accepted Answer

The beginning inventory overstatement of $12,000 would have decreased the cost of goods sold, thus increasing pre-tax income. The ending inventory understatement of $11,000 would have increased the cost of goods sold, thus decreasing pre-tax income. The net effect is a $1,000 increase in pre-tax income, making it $346,000.

For Calendar 2014, Halima Corporation Reported Pre-Tax Income of $345,000