Exercise 8-12 The net income per books of Linda Patrick Company was determined w
ID: 2514891 • Letter: E
Question
Exercise 8-12 The net income per books of Linda Patrick Company was determined without knowledge of the errors indicated below. Year Net Income per Books Error in Ending Inventory 2009 $62,700 Overstated $ 3,210 2010 64,930 Overstated 9,490 2011 66,970 Understated 11,580 2012 69,430 No error 2013 71,860 Understated 2,860 2014 74,180 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. Errors in Inventories Year Net Income Per Books Add Overstatement Jan. 1 Deduct Understatement Jan. 1 Deduct Overstatement Dec. 31 Add Understatement Dec. 31 Corrected Net Income 2009 $62,700 $ $ $ $ $ 2010 64,930 2011 66,970 2012 69,430 2013 71,860 2014 74,180 $ $
Explanation / Answer
Year
Net income as per Book
Add: Overstatement
1 Jan
Deduct: Understatement
1 Jan
Deduct: Overstatement
31 Dec
Add: Understatement
1 Dec
Total
2009
$62,700
$3,210
$59,490
2010
$64,930
$3210
$9,410
$58,730
2011
$66,970
$9,410
$11,580
$87,960
2012
$69,430
$11,580
$57,850
2013
$71,860
$2,860
$74,720
2014
$71480
$2,860
$8,420
$60,200
Total
$407,370
$398,950
The above table shows the adjustment to be done
Adjustment for $8420 would be done in 2015
Year
Net income as per Book
Add: Overstatement
1 Jan
Deduct: Understatement
1 Jan
Deduct: Overstatement
31 Dec
Add: Understatement
1 Dec
Total
2009
$62,700
$3,210
$59,490
2010
$64,930
$3210
$9,410
$58,730
2011
$66,970
$9,410
$11,580
$87,960
2012
$69,430
$11,580
$57,850
2013
$71,860
$2,860
$74,720
2014
$71480
$2,860
$8,420
$60,200
Total
$407,370
$398,950
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