Question

In: Accounting

The balance sheet of Ipod Corporation on December 31, 2024: Ipod Corporation

The balance sheet of Ipod Corporation on December 31, 2024:

Ipod Corporation

BALANCE SHEET AS OF DECEMBER 31, 2024

Assets

Cash

$ 40,000

Accounts and notes receivable

    30,000

Inventory

    90,000


$160,000

Liabilities and Capital

Accounts and notes payable

$ 20,000

Common stock

100,000

Retained earnings

    40,000


$160,000

These errors were made by Ipod on December 31, 2023 and were not corrected: Ending inventory understated $2,400 and prepaid expense of $1,000 omitted. On December 31, 2024, unearned revenue of $1,100 was omitted, and accrued revenue of $1,400 was omitted.

The net income shown by the books for 2024 was $13,200.

The correct 2024 Net Income is:

Select one:

a. $7,300

b. $12,300

c. $12,100

d. $14,900

e. $10,100

Solutions

Expert Solution

Answer: e. $10,100

Calculations:

Net income shown by the books for 2024 $13,200
Ending inventory overstated in last year ($2,400)
Prepaid expenses omitted in last year ($1,000)
Unearned revenue omitted in current year ($1,100)
Accrued revenue omitted in current year $1,400
The correct 2024 net income $10,100

Thus, Option e is correct and remaining options are incorrect.

ekkarill92 answered 3 years ago
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