In March 2018, Blue Devil Company realized that they had overstated their December 2016 ending inventory by $15,000. If the reported Net Income for 2017 was $125,000, what should be the correct Net Income for 2017? Why is the answer 140,000? If ending inventory is overstated by 15k wouldnt cost of goods sold be understated by 15k making Net income be overstated by 15k, therefore subtracting 15k from the net income to correct the error?  why would one add 15k to Net income to get 140k?

Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2020. The following data were available: Year Pretax Operating Excess of FIFO Ending Inventory Income using LIFO over LIFO Ending Inventory 2020 $40,000 $8,000 2019 20,000 7,000 2018 30,000 4,000 The income tax rate is 35%. The company began operations on January 1, 2018, and has paid no dividends since inception. Required: Answer the following questions relating to the 2019-2020 comparative financial statements. a. What is net income for 2020? b. What is restated net income for 2019? c. Prepare the 2019 statement of retained earnings as it would appear in the comparative 2019-2020 financial statements.

Ending inventory for the year ended December 31, 2017, is understated by $15,000. How will this error affect net income for 2018? Net income will be understated by $30,000. Net income will be understated by $15,000. O Net income will be overstated by $15,000. O Net income will be overstated by $30,000. O The understatement of inventory in 2017 will not affect income in 2018.

Tulip Company decided to change from LIFO to FIFO inventory costing, effective January 1, 2020. The following data were available: Year Pretax Operating Excess of FIFO Ending Inventory Income using LIFO over LIFO Ending Inventory 2020 $40,000 $8,000 2019 20,000 7,000 2018 30,000 4,000         The income tax rate is 35%. The company began operations on January 1, 2018, and has paid no dividends since inception. Required:   Answer the following questions relating to the 2019-2020 comparative financial statements. a. What is net income for 2020? b. What is restated net income for 2019? c. Prepare the 2019 statement of retained earnings as it would appear in the comparative 2019-2020 financial statements.

In 2021, Hopyard Lumber changed its inventory method from LIFO to FIFO. Inventory at the end of 2020 of $123,000 would have been $137,000 if FIFO had been used. Inventory at the end of 2021 is $150,000 using the new FIFO method but would have been $145,000 if the company had continued to use LIFO. What is the effect of the change on 2021 cost of goods sold?

Hunter Bank and Trust is considering giving Gama Company a loan. Hunter Bank and Trust is not sure about whether the inventory account’s 2016 year-end balance in Gama company is £1,188,000. Discussionswith the accountant reveal the following information. Gama company received from Alpha Inc. goods costing £100,000 on January 3, 2017. Alpha Inc. shipped the goods, under the term of FOB shipping point, on December 27,2016 to Gama Company. The goods were not included in the physical count. Gama Company received goods costing £176,000 on January 4, 2017 that were shipped, under the term of FOB shipping point, by ABC Company on December 30, 2016. The shipment was a rush order that was supposed to arrive December 31, 2016. This purchase was included in the ending inventory of £1,188,000. Gama company sold goods costing £152,000 to Grand Company, under the term of FOB shipping point, on December 27, 2016. The goods were not expected to arrive at Grand until January 10, 2017. These goods were…

Fantasy Fashions had used the LIFO method of costing inventories, but at the beginning of 2016 decided to change to the FIFO method. The inventory as reported at the end of 2015 using LIFO would have been $20 million higher using FIFO. Retained earnings reported at the end of 2014 and 2015 was $240 million and $260 million, respectively (reflecting the LIFO method). Those amounts reflecting the FIFO method would have been $250 million and $272 million, respectively. 2015 net income reported at the end of 2015 was $28 million (LIFO method) but would have been $30 million using FIFO. After changing to FIFO, 2016 net income was $36 million. Dividends of $8 million were paid each year. The tax rate is 40%. Required: 1. Prepare the journal entry at the beginning of 2016 to record the change in accounting principle. 2. In the 2016–2015 comparative income statements, what will be the amounts of net income reported for 2015 and 2016? 3. Prepare the 2016–2015 retained earnings column of the…

Ayayai Hardware Limited reported the following amounts for its cost of goods sold and Inventory: Cost of goods sold Ending inventory 2018 Ending inventory $169,200 Cost of goods sold 37,400 2017 Ayayai made two errors: (1) ending inventory for 2018 was overstated by $2,000 and (2) ending inventory for 2017 was understated by $4,100. Assume that neither error has been found or corrected. $152,900 Calculate the correct ending inventory and cost of goods sold amounts for each year. $ 29,400 2018 tA $ LA 2017

During 2017, Windsor Inc. changed from LIFO to FIFO inventory pricing. Windsor began operations in 2015 and its pretax income in 2016 and 2015 under LIFO was $610,000 and $706,000, respectively. Pretax income using FIFO pricing in the prior years would have been $636,000 in 2015 and $762,000 in 2016. In 2017, Windsor reported pretax income using FIFO pricing of $731,000. Show comparative income statements for Windsor beginning with “Income before income tax,” as presented in the 2017 income statement. The tax rate for all years is 30%.     2017   2016   2015 Income before income tax   $enter a dollar amount   $enter a dollar amount   $enter a dollar amount Income tax   enter a dollar amount   enter a dollar amount   enter a dollar amount Net Income   $enter a total amount   $enter a total amount