Reference no: EM131772168

One client indicated that they were interested in purchasing $42,500 worth of products, so the bookkeeper recorded the transaction. However, the client has not actually committed to the purchase.

The bookkeeper already corrected the sales account. However, the bookkeeper may have made a mistake when computing cost of goods sold. She included total production costs for 2014 and did not adjust ending inventory for the $42,500 worth of units left at the end of the year. The amount of ending inventory was determined using a physical count.

Nybrostrand Company 31-Dec-14 Trial Balance (accounts in alphabetical order)

	Debit	Credit
Accounts payable		$ 78,000
Accounts receivable	$ 36,500
Cash	30,000
Common stock		10,000
Depreciation expense	24,350
Cost of goods sold	307,000
Equipment (net of   depreciation)	415,000
Insurance	1,400
Inventory	34,000
Long-term debt		127,000
Marketing	4,500
Paid-in capital		50,000
Property taxes	16,900
Rent	28,000
Retained earnings		?
Revenues		586,000
Salaries	78,500
Utilities	6,700
Total	982,850	982,850

Prepare income statement in good format.How does the income or loss compare to the original income statement? Explain the importance of the matching concept.