Prepare the journal entry to bring the books of the company

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Question - ABC Company reported net incomes for a three-year period as follows:

2018, $180,000

2019, $190,000

2020, $200,000

In reviewing the accounts in 2021 after the books for the prior year have been closed, you find that the following errors have been made:

 

2018

2019

2020

Understatement of ending inventory

$40,000

$50,000

$30,000

Overstatement of depreciation expense

$6,000

$8,000

$10,000

Required -

1. Determine corrected net incomes for 2018, 2019, and 2020.

2. Prepare the journal entry to bring the books of the company up to date in 2021, assuming that the books have been closed for 2020.

Reference no: EM132779868

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