Antique Carpets\' books show the following data (in thousands). In early 2013, a
ID: 2505003 • Letter: A
Question
Antique Carpets' books show the following data (in thousands). In early 2013, auditors found that the ending inventory for 2010 was understated by $8 thousand and that the ending inventory for 2012 was overstated by $9 thousand. The ending inventory at December 31, 2011, was correct.
requirements
R1. Prepare corrected income statements for the three years.
R2. State whether each year's net income before your corrections is understated or overstated and indicate the amount of the understatement or overstatement.
(Thousands) 2012 2011 2010 Net sales revenue $206 $160 $175 cost of goods sold beginning inventory $19 $23 $43 net purchaes 138 95 81 cost of goods available 157 118 124 ending inventory (30) (19) (23) cost of goods sold 127 99 101 gross profit 79 61 74 operating expenses 52 37 34 net income $27 $24 $40Explanation / Answer
Particulars
2012
2011
2010
Net Sales Revenue
206
160
175
Less:-Cost of goods sold
(118)
(116)
(93)
Gross Profit
88
44
82
Less:- Operating Expenses
(52)
(37)
(34)
Net Income
36
7
54
Note:-
COST OF GOODS SOLD
Beginning Inventory
10
31
43
Add:- Net purchases
138
95
81
Cost of goods available for sale
148
126
124
Less:- Ending Inventory
(30)
(10)
(31)
Cost of goods sold
118
116
93
Statement showing Understatement or Overstatement of Net Income after corrections
Particulars
2012
2011
2010
Net Income before corrections
27
24
40
Net Income after corrections
36
7
54
Net income overstated or understated after corrections
Overstated
Understated
Overstated
Amount overstated or understated
Overstated by $9
Understated by $17
Overstated by $14
Particulars
2012
2011
2010
Net Sales Revenue
206
160
175
Less:-Cost of goods sold
(118)
(116)
(93)
Gross Profit
88
44
82
Less:- Operating Expenses
(52)
(37)
(34)
Net Income
36
7
54
Note:-
COST OF GOODS SOLD
Beginning Inventory
10
31
43
Add:- Net purchases
138
95
81
Cost of goods available for sale
148
126
124
Less:- Ending Inventory
(30)
(10)
(31)
Cost of goods sold
118
116
93
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