Question

Moonland Company's income statement contained the following errors: Ending inventory, December 31, 2018, understated by $9,000 Depreciation expense for 2018 overstated by $1,500 What is the effect of the errors on 2018 net income before taxes

Answer 1

Answer:

Understated by $10,500

Explanation:

Given that,

Ending inventory, December 31, 2018, understated by $9,000

Depreciation expense for 2018 overstated by $1,500

Therefore,

Effect of the errors on 2018 net income before taxes is as follows:

= Ending inventory + Depreciation expense

= $9,000 + $1,500

= $10,500

Hence, the 2018 net income will be understated by $10,500.