Exercise 8-12 The net income per books of Linda Patrick Company was determined w

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

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

Year

Net Income
per Books

Error in Ending
Inventory

2009 $56,400 Overstated $ 3,960 2010 58,440 Overstated 9,350 2011 60,490 Understated 12,790 2012 62,930 No error 2013 65,120 Understated 2,800 2014 67,340 Overstated 8,710

Explanation / Answer

Error in inventories year net income add Deduct deduct add corrected overstated understated income 2009 56,400 3,690 52,710 2010 58,440 3,690 9,350 52,780 2011 60,490 9,350 12,790 82,630 2012 62,930 12,790 50,140 2013 65,120 2,800 67,920 2014 67,340 2,800 8,710 55,830 total 370,720 362,010

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