Question

The net income per books of Jim Baker Industries Limited was determined without any knowledge of the following errors. The 2012 year was Jim Baker’s first year in business. No dividends have been declared or paid.

Year		Net Income per Books			Error in Ending Inventory
2012		$50,300			Overstated			$4,100
2013		54,300			Overstated			9,000
2014		56,100			Understated			11,000
2015		58,000			No error
2016		59,400			Understated			1,700
2017		61,600			Overstated			10,800

Prepare a work sheet to show the adjusted net income figure for each of the six years after taking the inventory corrections into account.

Errors in Inventories Under- Net Income Per Books Over- Over- Under- Corrected Net Income Year statement Jan. 1 statement Jan. 1 statement Dec. 31 statement Dec. 31 $50,300 $ 2012 2013 2014 2015 2016 2017 54,300 56,100 58,000 59,400 61,600

Answer 1

year	net income per books	add:over statement jan 1	deduct:understatement jan1	deduct:overstatement dec 31	add:under statement dec 31	correct net income
2012	50,300			4,100		46,200
2013	54,300	4,100		9,000		49,400
2014	56,100	9,000			11,000	76,100
2015	58,000		11,000			47,000
2016	59,400				1,700	61,100
2017	61,600		1,700	10,800		49,100
	339,700					328,900