During 2024, Passage Company discovered that the ending inventories reported on its financial statements were incorrect...

During 2024, Passage Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts:

2022	$60,000 understated
2023	$75,000 overstated

Prior to any adjustments for these errors, 2023 Net Income would be:

Select one:

a. Correct

b. $75,000 overstated

c. $15,000 overstated

d. $135,000 overstated

e. $75,000 understated

Solutions

Expert Solution

2023 Net Income would be:
Opening inventory understated that means net income overstated	$ 60,000
Closing inventory overstated means net income overstated	$ 75,000
Total Net Income overstated	$ 1,35,000

Correct Option :d. $135,000 overstated

ekkarill92 answered 2 years ago

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