For calendar 2017, Redfern Corporation reported pre-tax income of $270,000.You have been made aware that the company's beginning inventory was overstated by $14,000 and ending inventory was understated by $9,000.What is Redern's corrected pre-tax income for 2017?

Question

Quizplus · Accepted Answer

The beginning inventory overstatement increases cost of goods sold, reducing income by $14,000. The ending inventory understatement also increases cost of goods sold, reducing income by $9,000. Corrected pre-tax income is $270,000 + $14,000 + $9,000 = $293,000.

For Calendar 2017, Redfern Corporation Reported Pre-Tax Income of $270,000