Question
HCI, Inc. understated its ending inventory by $6,000 in 2006. Assume HCI, Inc. has a 25 percent income tax rate. Which of the following statements about the financial reports of HCI, Inc. for 2006 is correct? Answer
Ending inventory will be overstated by $4,500. Ending inventory will be understated by $4,500. Cost of sales will be overstated by $1,500. Net income will be understated by $4,500. HCI, Inc. understated its ending inventory by $6,000 in 2006. Assume HCI, Inc. has a 25 percent income tax rate. Which of the following statements about the financial reports of HCI, Inc. for 2006 is correct? HCI, Inc. understated its ending inventory by $6,000 in 2006. Assume HCI, Inc. has a 25 percent income tax rate. Which of the following statements about the financial reports of HCI, Inc. for 2006 is correct? Ending inventory will be overstated by $4,500. Ending inventory will be understated by $4,500. Cost of sales will be overstated by $1,500. Net income will be understated by $4,500. Ending inventory will be overstated by $4,500. Ending inventory will be understated by $4,500. Cost of sales will be overstated by $1,500. Net income will be understated by $4,500.
Explanation / Answer
Ending inventory will be understated by $4,500.