Question

In 2022, Draper Company discovered errors made in 2019-2021, its first three years of operation.

	2021	2020	2019
Items not recognized:
Prepaid expenses	$1,300	$900	$550
Accrued expenses	950	700	800
Other information:
Reported net income	$23,000	$25,000	$20,000
Dividends declared and paid	4,100	2,600	5,000
Common stock and additional paid in capital at 12/31	22,000	17,000	15,000

Restated 2020 Net Income will be:

Select one:

a. $25,250

b. $26,600

c. $25,200

d. $24,550

e. $25,450

Answer 1

Reported net income for 2020	$         25,000
Add:
Prepaid expenses	$               900
Less:
Accrued expenses	$               700
Restated net income	$         25,200
Correct Option :c. $25,200