Wilder Company reported pretax profit amounts of: 20B,$11,000; and 20C,$15,000.Later it was discovered that the ending inventory for 20B was understated by $2,000 (and not corrected in 20C).The correct pretax profit for each year was which of the following?

Question

Quizplus · Accepted Answer

The correct pretax profit for 20B would be $11,000 + $2,000 = $13,000 (since ending inventory was understated by $2,000, it means cost of goods sold was overstated by $2,000, which would decrease the pretax profit by $2,000).

The correct pretax profit for 20C remains $15,000 since there was no error in inventory for that year.

Therefore, the total correct pretax profit for both years would be $13,000 + $15,000 = $28,000.

Wilder Company Reported Pretax Profit Amounts Of: 20B,$11,000; and 20C,$15,000