Question

QUESTION 14 At Blue Baker Company, events and transactions during 2020 included the following. The tax rate for all items is 20% (1) Depreciation for 2018 was found to be understated by $120,000. (2) A strike by the employees of a supplier resulted in a loss of $100,000. (3) The inventory at December 31, 2018 was overstated by $160,000. (4) A disposal of a component of the business resulted in a $2,000,000 loss. The effect of these events and transactions on 2020 net income net of tax would be .A (47.000) OB.(S1,680,000) OC. (51,776,000) O D.(S1,904,000)

Answer 1

Effcet of net income of 2020
Particular	Amount $
A strike price by employee of a suppliers resulted in a loss of 100000*80%	$ 80000
A disposal of a component of busines resulted loss 2000000*80%	$ 1600000
net income net of tax for 2020	$ 1680000

option B

here event no.1 is a prior priod item so in current year , this prior period item not effected , it adjusted directly in retained earning

here event no.3 is a prior priod item ,so in current year , this prior period item not effected , it adjusted directly in retained earning