Question Details

What is the corrected amount for total assets and net income for the year 



1.	Risers Inc. reported total assets of $1,600,000 and net income of $85,000 for the current year. Risers determined that inventory was understated by $23,000 at the beginning of the year and $10,000 at the end of the year. What is the corrected amount for total assets and net income for the year ?
a.	$1,610,000 and $95,000.
b.	$1,590,000 and $98,000.
c.	$1,610,000 and $72,000.
d.	$1,600,000 and $85,000.

Use the following information for questions 2 through 4.

Hudson, Inc. is a calendar-year corporation.  Its financial statements for the years 2011 and 2010 contained errors as follows:
		2011			2010	
Ending inventory	$3,000 overstated	$8,000 overstated
Depreciation expense	$2,000 understated	$6,000 overstated

2.	Assume that the proper correcting entries were made at December 31, 2010. By how much will 2011 income before taxes be overstated or understated?
a.	$1,000 understated
b.	$1,000 overstated
c.	$2,000 overstated
d.	$5,000 overstated

	3.	Assume that no correcting entries were made at December 31, 2010. Ignoring income taxes, by how much will retained earnings at December 31, 2011 be overstated or understated?
a.	$1,000 understated
b.	$5,000 overstated
c.	$5,000 understated
d.	$9,000 understated

	4.	Assume that no correcting entries were made at December 31, 2010, or December 31, 2011 and that no additional errors occurred in 2012. Ignoring income taxes, by how much will working capital at December 31, 2012 be overstated or understated?
a.	$0
b.	$2,000 overstated
c.	$2,000 understated
d.	$5,000 understated

	5.	The following information is available for Naab Company for 2010:
Freight-in	$  30,000
Purchase returns	75,000
Selling expenses	150,000
Ending inventory	260,000
The cost of goods sold is equal to 400% of selling expenses.  What is the cost of goods available for sale?
a.	$600,000.
b.	$890,000.
c.	$815,000.
d.	$860,000.




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