Dows Company prepared income statements that reflected pretax income of $21,000 for 2015 and $30,000 for 2016. An audit has determined that there were two errors in the inventory amounts as follows:
Amount Reported
Correct Amount
Ending inventory, 2015
$15,000
$14,000
Ending inventory, 2016
18,000
16,000
Required:
Determine the correct pretax income amount for each year (show computations; assume the errors were not corrected):

Question

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The Answer of Dows Company prepared income statements that reflected pretax income of $21,000 for 2015 and $30,000 for 2016. An audit has determined that there were two errors in the inventory amounts as follows:
Amount Reported
Correct Amount
Ending inventory, 2015
$15,000
$14,000
Ending inventory, 2016
18,000
16,000
Required:
Determine the correct pretax income amount for each year (show computations; assume the errors were not corrected):

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