Reference no: EM132970398

Company Ltd. prepared its draft 20X0 financial statements in February 20X1. The draft SCI showed earnings of $1,100,000. After the draft statements were prepared, but prior to their approval and release, the external auditors discovered several errors:

a) Inventory of $50,000 that was received from a vendor on December 29, 20X0 (and included in the December 31, 20X0 physical inventory count) had not been recorded as an account payable until well into January 20X1.

b) The company had shipped product worth $240,000 to a distant customer FOB shipping point on December 28, 20X0. The revenue (and AR) was recorded by Company on January 4, 20X1. However, the shipment was excluded from inventory, so COS has been recorded.

c) Although the company's internal auditors had discovered a calculation error in the worksheets for the December 31, 20X0 physical inventory, the error was not yet corrected. Year-end 20X0 inventory actually should have been $100,000 greater than recorded and reported.

d) Product costing $160,000 was shipped to a large chain of stores in the final week of the fiscal year; a sale (and receivable) of $250,000 had correspondingly been recorded. However, the chain had accepted the product on consignment.

Problem 1: What is the revised 20X0 earnings after correction of these errors?