The net income per books of Dorothy Taylor Company was determined without knowledge of the errors indicated below. Error in Ending Inventory Net Income Year per Books 2020 $53,000 Overstated $2.810 2021 54.970 Overstated 8.290 2022 56,960 Understated 11.140 2023 58.810 No error 2024 60,750 Understated 1.980 2025 62,930 Overstated 8,420 Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. Net Income Year Per Books 2020 2021 Errors in Inventories Understatement Overstatement Dec. 31 Overstatement Jan. 1 Jan. 1 $53,000 $ 54,970 2022 56,960 2023 58,810 2024 60,750 2025 62.930 $

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Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.  

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.