Ask Question
23 July, 12:51

The reported net incomes for the first 2 years of Larkspur Products, Inc., were as follows: 2020, $156,100; 2021, $196,600. Early in 2022, the following errors were discovered. 1. Depreciation of equipment for 2020 was overstated $16,400. 2. Depreciation of equipment for 2021 was understated $36,400. 3. December 31, 2020, inventory was understated $45,100. 4. December 31, 2021, inventory was overstated $16,100.

+3
Answers (1)
  1. 23 July, 15:25
    0
    Given that the following errors were discovered.

    1. Depreciation of equipment for 2020 was overstated $16,400.

    2. Depreciation of equipment for 2021 was understated $36,400.

    3. December 31, 2020, inventory was understated $45,100.

    4. December 31, 2021, inventory was overstated $16,100.

    Details Effect on retained earning

    Overstatement of

    2020 Depreciation. $16,400

    Overstatement of

    2021 inventory. ($16,100)

    Understatement of

    2021 Depreciation. ($36400)

    Total effect on retained

    Earning. ($36,100)

    2020 inventory understatement has been corrected automatically at the end of 2021
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The reported net incomes for the first 2 years of Larkspur Products, Inc., were as follows: 2020, $156,100; 2021, $196,600. Early in 2022, ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers