3. What effect did the error have on the income tax expense for 2022 and 2023? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2023 Overstatement 2022 Understatement
3. What effect did the error have on the income tax expense for 2022 and 2023? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2023 Overstatement 2022 Understatement
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 38E: Sundahl Companys income statements for the past 2 years are as follows: Refer to the information for...
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Transcribed Image Text:The statements of earnings for Pruitt Company summarized for a four-year period show the following (amounts in thousands
of dollars):
Sales revenue
Cost of sales
Gross profit
Operating expenses
Pretax earnings
Income tax expense (40 %)
Net earnings
2024
2023
$3,125 $3,550
2,055 2,177
1,070
600
470
188
$ 282
2021
$4,075
2,663
1,412
652
820
760
328
304
$ 450 $ 492 $ 456
1,373
623
2022
$3,800
2,332
1,468
648
750
300
An audit revealed that in determining these amounts, the ending inventory for 2022 was understated by $44.
Transcribed Image Text:3. What effect did the error have on the income tax expense for 2022 and 2023? (Do not round intermediate calculations.
Round the final answers to the nearest dollar amount.)
Income tax expense
2023 Overstatement
2022 Understatement
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