P6-5 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO6-5 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 An audit revealed that in determining these amounts, the ending inventory for 2022 was understated by $56. Required: 1. Revise these statements of earnings to reflect the correct amounts. (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Sales revenue Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense Net earnings 2021 2024 2023 2022 $3,725 $4,150 $4,400 $4,675 2,355 2,477 2,632 2,963 1,370 1,673 1,768 1,712 660 683 708 712 710 990 1,060 1,000 284 396 424 400 $ 426 $ 594 $ 636 $ 600 O Not affected O Affected 2023 2022 PRUITT COMPANY Corrected Statement of Earnings 2024 2023 2. Did the error affect the cumulative net earnings for the four-year period? 2022 Income tax expense 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.) 2021
P6-5 (Algo) Analyzing and Interpreting the Effects of Inventory Errors LO6-5 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 An audit revealed that in determining these amounts, the ending inventory for 2022 was understated by $56. Required: 1. Revise these statements of earnings to reflect the correct amounts. (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) Sales revenue Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense Net earnings 2021 2024 2023 2022 $3,725 $4,150 $4,400 $4,675 2,355 2,477 2,632 2,963 1,370 1,673 1,768 1,712 660 683 708 712 710 990 1,060 1,000 284 396 424 400 $ 426 $ 594 $ 636 $ 600 O Not affected O Affected 2023 2022 PRUITT COMPANY Corrected Statement of Earnings 2024 2023 2. Did the error affect the cumulative net earnings for the four-year period? 2022 Income tax expense 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.) 2021
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 56P: The following selected information is taken from the financial statements of Arnn Company for its...
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