Compute the corrected operating income

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Reference no: EM13915131

Necessary Toys Company's condensed income state- ments for two years follow.

	2014	2013
Sales	$252,000	$210,000
Cost of goods sold	150,000	108,000
Gross margin	$102,000	$102,000
Operating expenses	60,000	60,000
Income before income taxes	$ 42,000	$ 42,000

After the end of 2014, the company discovered that an error had resulted in an $18,000 understatement of the 2013 ending inventory.

Compute the corrected operating income for 2013 and 2014. What effect will the error have on operating income and stockholders' equity for 2015?

Reference no: EM13915131

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