Question Four: (10 marks) (A1, A2, D4)
Vance Company reported net incomes for a three-year period as follows:
2017, $186,000;2018, $189,000;2019, $180,000.
In reviewing the accounts in 2020 after the books for the prior year have been closed, you find that the following errors have been made in summarizing activities:
2017 2018 2019
Overstatement of ending inventory $42,00 $51,000 $24,000
Understatement of accrued advertising expense 6,600 12,000 7,200
Instructions
(a)Determine corrected net incomes for 2017, 2018, and 2019. (5 Marks)
(b)Give the entry to bring the books of the company up to date in 2020, assuming that the books have been closed for 2019. (5 Marks)
