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7 June, 11:00

Moonland Company's income statement contained the following errors: Ending inventory, December 31, 2018, understated by $9,000 Depreciation expense for 2018 overstated by $1,500 What is the effect of the errors on 2018 net income before taxes

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  1. 7 June, 13:18
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    Understated by $10,500

    Explanation:

    Given that,

    Ending inventory, December 31, 2018, understated by $9,000

    Depreciation expense for 2018 overstated by $1,500

    Therefore,

    Effect of the errors on 2018 net income before taxes is as follows:

    = Ending inventory + Depreciation expense

    = $9,000 + $1,500

    = $10,500

    Hence, the 2018 net income will be understated by $10,500.
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