Bananas, Inc. is a calendar-year corporation. Its financial statements for the years ended December 31, 2019 and 2020 contained the following errors: Ending Inventory Depreciation expense 2019 $25,000 overstatement 10,000 understatement 2020 $40,000 understatement 20,000 overstatement Assume that no correcting entries were made in 2019 or 2020 and that no errors existed in 2018. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated? Enter an overstatement as a positive number and an understatement as a negative number.

Bananas, Inc. is a calendar-year corporation. Its financial statements for the years ended December 31, 2019 and 2020 contained the following errors: Ending Inventory Depreciation expense 2019 $25,000 overstatement 10,000 understatement 2020 $40,000 understatement 20,000 overstatement Assume that no correcting entries were made in 2019 or 2020 and that no errors existed in 2018. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated? Enter an overstatement as a positive number and an understatement as a negative number.

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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