P7-6 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-5 [The following information applies to the questions displayed below.] The income statement for Pruitt Company summarized for a four-year period shows the following: Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income 2016 2017 2018 2019 $2,030,000 $2,459,000 $2,716,000 $2,992,000 1,487,000 1,619,000 1,763,000 2,112,000 543,000 490,000 53,000 15,900 $37,100 840,000 493,000 347,000 104, 100 $242,900 953,000 534,000 419,000 125,700 $293,300 880,000 537,000 343,000 102,900 $240,100 An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $13,000. The company uses a periodic inventory system.
P7-6 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-5 [The following information applies to the questions displayed below.] The income statement for Pruitt Company summarized for a four-year period shows the following: Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income 2016 2017 2018 2019 $2,030,000 $2,459,000 $2,716,000 $2,992,000 1,487,000 1,619,000 1,763,000 2,112,000 543,000 490,000 53,000 15,900 $37,100 840,000 493,000 347,000 104, 100 $242,900 953,000 534,000 419,000 125,700 $293,300 880,000 537,000 343,000 102,900 $240,100 An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $13,000. The company uses a periodic inventory system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Required information
P7-6 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-5
[The following information applies to the questions displayed below.]
The income statement for Prultt Company summarized for a four-year period shows the following:
Sales revenue
Cost of goods sold
Gross profit
Expenses
Pretax income
Income tax expense (30%)
Net income
P7-6 Part 1
2016
2017
$2,030,000 $2,459,000
1,487,000
1,619,000
Sales revenue
Cost of goods sold
Gross profit
543,000
490,000
Expenses
Pretax income
Income tax expense (30%)
Net income
53,000
15,900
$37,100
840,000
493,000
347,000
104, 100
$242,900
PRUITT COMPANY
Income Statement
For the Four-Year Period
2010
2017
2018
$2,716,000
1,763,000
An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $13,000. The
company uses a periodic inventory system.
953,000
534,000
2018
419,000
125,700
$293,300
Required:
1. Prepare the income statements to reflect the correct amounts, taking into consideration the inventory error.
2019
$2,992,000
2,112,000
880,000
537,000
343,000
102,900
$240,100
2019](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa9606a5e-05f9-4a9e-890d-65600c959df2%2F31713f41-52aa-43eb-9f2b-7f326c78865c%2Fssmalf4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
P7-6 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO7-5
[The following information applies to the questions displayed below.]
The income statement for Prultt Company summarized for a four-year period shows the following:
Sales revenue
Cost of goods sold
Gross profit
Expenses
Pretax income
Income tax expense (30%)
Net income
P7-6 Part 1
2016
2017
$2,030,000 $2,459,000
1,487,000
1,619,000
Sales revenue
Cost of goods sold
Gross profit
543,000
490,000
Expenses
Pretax income
Income tax expense (30%)
Net income
53,000
15,900
$37,100
840,000
493,000
347,000
104, 100
$242,900
PRUITT COMPANY
Income Statement
For the Four-Year Period
2010
2017
2018
$2,716,000
1,763,000
An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $13,000. The
company uses a periodic inventory system.
953,000
534,000
2018
419,000
125,700
$293,300
Required:
1. Prepare the income statements to reflect the correct amounts, taking into consideration the inventory error.
2019
$2,992,000
2,112,000
880,000
537,000
343,000
102,900
$240,100
2019
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