50.1K

Verified Solution

Link Copied!

In early

2026,

auditors found that the ending merchandise inventory for

2023

was understated by

$8,000

and that the ending merchandise inventory for

2025

was overstated by

$9,000.

The ending merchandise inventory at December 31,

2024,

was correct.

Requirement 1. Prepare corrected income statements for the three years.

Requirement 2. State whether each year's net

incomebefore

your

correctionsis

understated or overstated, and indicate the amount of the understatement or overstatement.

Requirement 3. Compute the inventory turnover and days' sales in inventory using the corrected income statement for the three years. (Round all numbers to two decimals.)

Select the labels and enter the amounts to compute inventory turnover for each year. (Round your answers to two decimal places, X.XX.)

Antique Carpets' books show the following data. (Click the icon to view the income statements.) In early 2026, auditors found that the ending merchandise inventory for 2023 was understated by $8,000 and that the ending merchandise inventory for 2025 was overstated by $9,000. The ending merchandise inventory at December 31, 2024, was correct. Read the requirements. Requirement 1. Prepare corrected income statements for the three years. Data Table x Antique Carpets Income Statement For the Years Ended December 31, 2025, 2024, and 2023 2025 2024 2023 2025 2024 2023 Net Sales Revenue $ 218,000 $ 164,000 $ 177,000 Ending Merchandise Ending Merchandise Inventory Understated Cost of Goods Sold: Inventory Overstated Beginning Merchandise Inventory $ by $9,000 Correct by $8,000 $ 21,000 131,000 $ 28,000 96,000 42,000 88,000 Net Sales Revenue 218000 164000 177000 Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale Cost of Goods Sold: 152,000 30,000 124,000 21,000 130,000 28,000 Beginning Merchandise Inventory 21000 29000 Less: Ending Merchandise Inventory 122,000 103,000 Cost of Goods Sold 102,000 Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale Gross Profit 61,000 75,000 96,000 67,000 37,000 38,000 Less: Ending Merchandise Inventory Operating Expenses $ 29,000 $ 24,000 $ Cost of Goods Sold 37,000 Net Income Gross Profit Operating Expenses Print Done Net Income Requirement 2. State whether each year's net income-before your correctionsis understated or overstated, and indicate the amount of the understatement or overstatement. Choose from any list or enter any number in the input fields and then continue to the next

Answer & Explanation Solved by verified expert

See Answer