Dows Company prepared income statements that reflected pretax income of $21,000 for 2010 and $30,000 for 2011.An audit has determined that there were two errors in the inventory amounts as follows:
$$\begin{array} { l c c }
& \begin{array} { c }
\text { Amount } \
\text { Reported }
\end{array} & \underline { \text { Correct Amount } } \
\text { Ending inventory, 2010 } & \$ 15,000 & \$ 14,000 \
\text { Ending inventory, 2011 } & 18,000 & 16,000
\end{array}$$ Determine the correct pretax income amount for each year (show computations assuming the errors were not corrected)

Question

Dows Company prepared income statements that reflected pretax income of $21,000 for 2010 and $30,000 for 2011.An audit has determined that there were two errors in the inventory amounts as follows:
 $$\begin{array} { l c c } 
& \begin{array} { c } 
\text { Amount } \
\text { Reported }
\end{array} & \underline { \text { Correct Amount } } \
\text { Ending inventory, 2010 } & \$ 15,000 & \$ 14,000 \
\text { Ending inventory, 2011 } & 18,000 & 16,000
\end{array}$$ Determine the correct pretax income amount for each year (show computations assuming the errors were not corrected)

Quizplus · Accepted Answer

The Answer of Dows Company prepared income statements that reflected pretax income of $21,000 for 2010 and $30,000 for 2011.An audit has determined that there were two errors in the inventory amounts as follows:
 $$\begin{array} { l c c } 
& \begin{array} { c } 
\text { Amount } \
\text { Reported }
\end{array} & \underline { \text { Correct Amount } } \
\text { Ending inventory, 2010 } & \$ 15,000 & \$ 14,000 \
\text { Ending inventory, 2011 } & 18,000 & 16,000
\end{array}$$ Determine the correct pretax income amount for each year (show computations assuming the errors were not corrected)

Dows Company Prepared Income Statements That Reflected Pretax Income of $21,000