The net income per books of Linda Williams Company was determined without knowledge of the errors indicated below. Net Income Error in Ending Year per Books Inventory 2015 $54,500 Overstated $3,120 2016 56,470 Overstated 8,670 2017 58,270 Understated 10,790 2018 60,150 No error 2019 62,210 Understated 1,940 2020 64,350 Overstated 8,030 Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. Errors in Inventories Net Income Overstatement Understatement Year Per Book Overstatemer Jan. 1 Jan. 1 Dec. 31 2015 $54,500 2$ %24 2016 56,470 2017 58,270 2018 60.150 2019 62,210 2020 64,350
The net income per books of Linda Williams Company was determined without knowledge of the errors indicated below. Net Income Error in Ending Year per Books Inventory 2015 $54,500 Overstated $3,120 2016 56,470 Overstated 8,670 2017 58,270 Understated 10,790 2018 60,150 No error 2019 62,210 Understated 1,940 2020 64,350 Overstated 8,030 Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. Errors in Inventories Net Income Overstatement Understatement Year Per Book Overstatemer Jan. 1 Jan. 1 Dec. 31 2015 $54,500 2$ %24 2016 56,470 2017 58,270 2018 60.150 2019 62,210 2020 64,350
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:**Net Income Analysis for Linda Williams Company**
The net income per books of Linda Williams Company was assessed without awareness of the following inventory errors:
| Year | Net Income per Books | Error in Ending Inventory |
|------|----------------------|---------------------------|
| 2015 | $54,500 | Overstated $3,120 |
| 2016 | $56,470 | Overstated $8,670 |
| 2017 | $58,270 | Understated $10,790 |
| 2018 | $60,150 | No error |
| 2019 | $62,210 | Understated $1,940 |
| 2020 | $64,350 | Overstated $8,030 |
**Worksheet Preparation:**
A worksheet is to be prepared to display the adjusted net income for each of the six years after accounting for inventory errors. The table structure is as follows:
| Year | Net Income Per Books | Overstatement Jan. 1 | Understatement Jan. 1 | Overstatement Dec. 31 |
|------|----------------------|----------------------|------------------------|-----------------------|
| 2015 | $54,500 | | | |
| 2016 | $56,470 | | | |
| 2017 | $58,270 | | | |
| 2018 | $60,150 | | | |
| 2019 | $62,210 | | | |
| 2020 | $64,350 | | | |
This table will assist in calculating the corrected net income by adjusting for errors in each year’s ending inventory figures.
Transcribed Image Text:This educational resource discusses the impact of inventory errors on net income over a six-year period. Here's a detailed breakdown:
### Table: Net Income and Inventory Errors
#### Yearly Data:
- **2015**
- **Net Income per Books:** $54,500
- **Error in Ending Inventory:** Overstated by $3,120
- **2016**
- **Net Income per Books:** $56,470
- **Error in Ending Inventory:** Overstated by $8,670
- **2017**
- **Net Income per Books:** $58,270
- **Error in Ending Inventory:** Understated by $10,790
- **2018**
- **Net Income per Books:** $60,150
- **Error in Ending Inventory:** No error
- **2019**
- **Net Income per Books:** $62,210
- **Error in Ending Inventory:** Understated by $1,940
- **2020**
- **Net Income per Books:** $64,350
- **Error in Ending Inventory:** Overstated by $8,030
### Worksheet Instructions:
Prepare a worksheet to adjust the net income for each year, taking into account the errors in inventory.
#### Errors in Inventories Table:
- **Understatement (Jan. 1)**
- **Overstatement (Dec. 31)**
- **Understatement (Dec. 31)**
- **Corrected Net Income**
Each row corresponds to a year from 2015 to 2020, intended for calculations to adjust the reported net income based on inventory errors stated.
This worksheet is essential for accurately reflecting financial performance by adjusting net income figures to account for any inventory misstatements.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education