The following information is presented for Bramble Corporation. The net income figures were computed without knowledge of the errors in ending inventory. Assume that there was no error in the 2016 ending inventory. Year Net Income per Books Error in Ending Inventory 2017 $ 192,000 Overstated $ 26,000 2018 89,000 Overstated 34,500 2019 106,000 No error - 2020 216,000 Understated 6,600 2021 97,000 Understated 19,500 Prepare a worksheet to show the adjusted net income figure for each year from 2017 to 2021 after taking into account the inventory errors.
The following information is presented for Bramble Corporation. The net income figures were computed without knowledge of the errors in ending inventory. Assume that there was no error in the 2016 ending inventory. Year Net Income per Books Error in Ending Inventory 2017 $ 192,000 Overstated $ 26,000 2018 89,000 Overstated 34,500 2019 106,000 No error - 2020 216,000 Understated 6,600 2021 97,000 Understated 19,500 Prepare a worksheet to show the adjusted net income figure for each year from 2017 to 2021 after taking into account the inventory errors.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The following information is presented for Bramble Corporation. The net income figures were computed without knowledge of the errors in ending inventory. Assume that there was no error in the 2016 ending inventory.
|
Year
|
Net Income
per Books |
Error in Ending
Inventory |
||||
|---|---|---|---|---|---|---|
| 2017 | $ 192,000 | Overstated | $ 26,000 | |||
| 2018 | 89,000 | Overstated | 34,500 | |||
| 2019 | 106,000 | No error | - | |||
| 2020 | 216,000 | Understated | 6,600 | |||
| 2021 | 97,000 | Understated | 19,500 |
Prepare a worksheet to show the adjusted net income figure for each year from 2017 to 2021 after taking into account the inventory errors.
Transcribed Image Text:### Errors in Inventories
#### Table Structure
The table is designed to track errors in inventory over two specific dates, showing their effects on financial statements.
**Columns:**
1. **Understatement Jan. 1**: Records any initial inventory understatements at the beginning of the period (January 1st).
2. **Overstatement Dec. 31**: Captures inventory overstatements at the end of the period (December 31st).
3. **Understatement Dec. 31**: Reflects any inventory understatements at the end of the period (December 31st).
4. **Corrected Net Income**: Adjusts net income based on identified inventory errors.
**Rows:**
- Each row provides space for financial figures in dollars ($) to specify the amount of error or adjustment required.
**Empty fields** are available under each column to enter the corresponding dollar amounts.
**Final Row**:
- Provides a cumulative space for overall corrected net income after considering the inventory adjustments.
This table is useful for financial analysis, accounting reconciliation, and ensuring accurate representation of inventory-related impacts on net income.
Transcribed Image Text:### Adjusted Net Income Worksheet for Inventory Errors (2017-2021)
This worksheet is designed to help calculate the adjusted net income for each year from 2017 to 2021 after considering inventory errors. It includes spaces for adjustments due to overstatement and understatement of inventory at the beginning and end of each year.
#### Table Structure:
- **Columns:**
- **Year**: Lists each year from 2017 to 2021.
- **Net Income Per Books**: Shows the reported net income for each year.
- **Errors in Inventories**:
- **Overstatement Jan. 1**: Space to note any overstatement of inventory at the beginning of the year.
- **Understatement Jan. 1**: Space to note any understatement of inventory at the beginning of the year.
- **Overstatement Dec. 31**: Space for recording overstatement of inventory at the end of the year.
#### Recorded Data:
- **2017:**
- Net Income Per Books: $192,000
- **2018:**
- Net Income Per Books: $89,000
- **2019:**
- Net Income Per Books: $106,000
- **2020:**
- Net Income Per Books: $216,000
- **2021:**
- Net Income Per Books: $97,000
- **Total Adjustment Field**: Space is provided to calculate the total adjustment across all years for final analysis.
### Instructions:
Fill in the identified errors in inventories for each year, then calculate the adjusted net income by considering these errors against the reported net income. This exercise is crucial for accurate financial reporting and ensuring conformity with accounting standards.
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