Question regarding the boswell electric

Assignment Help Accounting Basics

Reference no: EM13256677

Boswell Electric prepared the following condensed income statements for two successive years:

Particulars

2008

(Rs.)

2007

(Rs.)

Sales

Cost of goods sold

Gross profit on sales

Operating expenses

Net income

200,000

150,000

50,000

30,000

20,000

160,000

100,000

60,000

20,000

40,000

At The end of the year 2007, the inventory wasunderstated by Rs. 10,000, but the error was not discovered untilafter the accounts had been closed and financial statementsprepared at the end of the year 2008. The balance sheets for thetwo years showed owner's equity of Rs. 50,000 at the end ofthe year 2007 and Rs. 60,000 at the end of the year 2008. (Boswellis organized as a sole-proprietorship and does not incur incometaxes expense.)

Required:

1. Prepare the corrected income statement for the year 2007 and2008
2. What correction, if any, should be made in the amounts ofthe company's owner's equity at the end of the year2007 and 2008?

Reference no: EM13256677

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