Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver

تمرين 19

Correcting inventory errors over a three-year period
Peaceful Carpets' books show the following data. In early 2013, auditors found that the ending inventory for 2010 was understated by $4,000 and that the ending inventory for 2012 was overstated by $5,000. The ending inventory at December 31, 2011, was correct.

Requirements
1. Prepare corrected income statements for the three years.
2. State whether each year's net income-before your corrections-is understated or overstated and indicate the amount of the understatement or overstatement.