Solution-Calculate the net income, In 2025, the company

Calculate the net income

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Question - Presented below are the comparative income statements for Watson Industries for the years 2024 and 2025, prior to the information provided in the bulleted list below. Assume no taxes exist.

	2025	2024
Sales	$660,000	$600,000
Cost of Sales	430,000	390,000
Gross Profit	230,000	210,000
Expenses	180,000	170,000
Net Income	$50,000	$40,000
Retained Earnings, Jan. 1	$117,000	$89,000
Net Income	50,000	40,000
Dividends	(15,000)	(12,000)
Retained Earnings, Dec. 31	$152,000	$117,000

In 2025, the company decided to switch depreciation methods from sum-of-the-years-digits to the straight-line method. The assets were purchased at the beginning of 2024 for $120,000 with an estimated useful life of 5 years and no salvage value. The 2024 Net Income of $40,000 is based on SYD.

In 2025, the company discovered that the ending inventory for 2024 was understated by $13,000.

Accrued expenses of $4,000 were omitted in 2024.

Required - In the revised financial statements, calculate the 2024 Net Income?

a. $57,000

b. $67,000

c. $23,000

d. $60,000

e. $49,000

Reference no: EM132615749

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Calculate the net income

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