The Mike Tomlin Company has a calendar-year accounting period. The following error was discovered in April of 2019. This error would have affected the financial statements for 2017 and 2018. The ending balance in the inventory had been overstated at 12/31/2017 by $100,000. INSTRUCTIONS: Compute the effect this error had on the 2017 net income. Compute the effect, if any, each error had on the December 31, 2017 balance sheet items. Hint: be very careful about the time period!

The Mike Tomlin Company has a calendar-year accounting period. The following error was discovered in April of 2019. This error would have affected the financial statements for 2017 and 2018. The ending balance in the inventory had been overstated at 12/31/2017 by $100,000. INSTRUCTIONS: Compute the effect this error had on the 2017 net income. Compute the effect, if any, each error had on the December 31, 2017 balance sheet items. Hint: be very careful about the time period!

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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Question

The Mike Tomlin Company has a calendar-year accounting period. The
following error was discovered in April of 2019. This error would have
affected the financial statements for 2017 and 2018. The ending balance in
the inventory had been overstated at 12/31/2017 by $100,000.
INSTRUCTIONS: Compute the effect this error had on the 2017 net income.
Compute the effect, if any, each error had on the December 31, 2017
balance sheet items. Hint: be very careful about the time period!

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