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2 July, 11:46

The reported net incomes for the first 2 years of Larkspur Products, Inc., were as follows: 2020, $156,100; 2021, $196,600. Early in 2022, the following errors were discovered. 1. Depreciation of equipment for 2020 was overstated $16,400. 2. Depreciation of equipment for 2021 was understated $36,400. 3. December 31, 2020, inventory was understated $45,100. 4. December 31, 2021, inventory was overstated $16,100.

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  1. 2 July, 12:14
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    Given that the following errors were discovered.

    1. Depreciation of equipment for 2020 was overstated $16,400.

    2. Depreciation of equipment for 2021 was understated $36,400.

    3. December 31, 2020, inventory was understated $45,100.

    4. December 31, 2021, inventory was overstated $16,100.

    Details Effect on retained earning

    Overstatement of

    2020 Depreciation. $16,400

    Overstatement of

    2021 inventory. ($16,100)

    Understatement of

    2021 Depreciation. ($36400)

    Total effect on retained

    Earning. ($36,100)

    2020 inventory understatement has been corrected automatically at the end of 2021
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Home » Business » The reported net incomes for the first 2 years of Larkspur Products, Inc., were as follows: 2020, $156,100; 2021, $196,600. Early in 2022, the following errors were discovered. 1. Depreciation of equipment for 2020 was overstated $16,400. 2.
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