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3. What effect did the error have on the income tax expense for 2022 and 2023? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2023 Overstatement 2022 Understatement

3. What effect did the error have on the income tax expense for 2022 and 2023? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2023 Overstatement 2022 Understatement

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The statements of earnings for Pruitt Company summarized for a four-year period show the following (amounts in thousands of dollars): Sales revenue Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense (40 %) Net earnings 2024 2023 $3,125 $3,550 2,055 2,177 1,070 600 470 188 $ 282 2021 $4,075 2,663 1,412 652 820 760 328 304 $ 450 $ 492 $ 456 1,373 623 2022 $3,800 2,332 1,468 648 750 300 An audit revealed that in determining these amounts, the ending inventory for 2022 was understated by $44.
Transcribed Image Text:The statements of earnings for Pruitt Company summarized for a four-year period show the following (amounts in thousands of dollars): Sales revenue Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense (40 %) Net earnings 2024 2023 $3,125 $3,550 2,055 2,177 1,070 600 470 188 $ 282 2021 $4,075 2,663 1,412 652 820 760 328 304 $ 450 $ 492 $ 456 1,373 623 2022 $3,800 2,332 1,468 648 750 300 An audit revealed that in determining these amounts, the ending inventory for 2022 was understated by $44.
3. What effect did the error have on the income tax expense for 2022 and 2023? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2023 Overstatement 2022 Understatement
Transcribed Image Text:3. What effect did the error have on the income tax expense for 2022 and 2023? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2023 Overstatement 2022 Understatement
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