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Rutland Company reported net income of $630,000 at December 31, 2020 and net income of $550,000 at December 31, 2021
Rutland Company reported net income of $630,000 at December 31, 2020 and net income of $550,000 at December 31, 2021. Rutland later discovered that its ending inventories at December 31, 2019 and 2020, were overstated by $77.500 and $112,000 respectively. The December 31, 2021 inventory was correct. Required: Assuming that no corrections were made in any year, determine the corrected amounts for 2020 and 2021 net income. HTML Editora
Expert Solution
| Reported net income on December 31, 2021 | $550,000 |
| Add: Correction of ending inventory of last year | $112,000 |
| Corrected net income for 2021 | $662,000 |
| Reported net income on December 31, 2020 | $630,000 |
| Add: Correction of ending inventory of last year | $77,500 |
| Less: Correction of ending inventory of current year | ($112,000) |
| Corrected net income for 2020 | $595,500 |
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