Can you please help me answer the following question? The reported net incomes f
ID: 2470753 • Letter: C
Question
Can you please help me answer the following question?
The reported net incomes for the first 2 years of Sandra Gustafson Products, Inc., were as follows: 2014, $145,900; 2015, $189,860. Early in 2016, the following errors were discovered. Depreciation of equipment for 2014 was overstated $12,170. Depreciation of equipment for 2015 was understated $37,320. December 31, 2014, inventory was understated $49,540. December 31, 2015, inventory was overstated $15,120. Prepare the correcting entry necessary when these errors are discovered. Assume that the books are closed. (Ignore income tax considerations.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)Explanation / Answer
Dr. Retained earning A/c $40270
Cr. Inventory A/c $15,120
Cr. Accumulated Depriciation A/c $25,150 ($37,320 - $12,170)