Question

By the Bay Marine Supply reported the following comparative income statements for the years ended November 30,2016, and 2015:

By the Bay's president and shareholders are thrilled by the company's boost in sales and net income during 2016. Then the accountants for the company discover that ending 2015 inventory was understated by $9,000. Prepare the corrected comparative income statements for the two-year period, complete with a heading for the statements. How well did By the Bay Marine Supply really perform in 2016 as compared with 2015?

 

 

Answer 1

By the Bay Marine Supply
Income Statement (Corrected)
Years Ended November 30, 2016 and 2015
	2016		2015
Sales revenue		$135,000		$122,000
Cost of goods sold:
Beginning inventory	$23,500		$ 14,000
Net purchases	76,000		75,000
Cost of goods avail.	99,500		89,000
Ending inventory	(19,000)		(23,500)*
Cost of goods sold		80,500		65,500
Gross profit		54,500		56,500
Operating expenses		30,000		23,000
Net income		$ 24,500		$ 33,500

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*$14,500 + $9,000 = $23,500

 

 

By the Bay Marine Supply actually performed poorly in 2016, compared to 2015, with net income down from $33,500 to $24,500.