During the course of your examination of the financial
statements of the Hales Corporation for the year ended December 31,
2021, you discover the following:
Required:
Determine the proper amount of net income for 2021. (Amounts to be deducted should be indicated by a minus sign.)
unadjusted net income$_______
adjustments:
a.insurance expense overstated$ ________
b. sales revenue overstated $ ________
c.supplies expense overstated$ ________
d.interest expense understated $________
adjusted net income $________
Interest expense = 14,000 x 12% x 3/12
= $420
unadjusted net income= $29,000
adjustments:
a.insurance expense overstated = $ 2,200
b. sales revenue overstated =- $600
c.supplies expense overstated= $540
d.interest expense understated = - $420
adjusted net income = $29,000 + 2,200 - 600 + 540 - 420
= $30,720
Kindly comment if you need further assistance. Thanks
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