Question

Airdrive Corporation reported net income of $150,000 for 2019 and $165,000 for 2020. Early in 2020, Airdrive discovers that the December 31, 2019 ending inventory was overstated by $8,100. For simplicity, ignore taxes. Required: 1. What is the correct net income for 2019? For 2020? Net Income 2019 $ 2020 $ 2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020? December 31, 2019 December 31, 2020

Answer 1

Poop

Step-by-step explanation:

Answer 2

Please see answers below

Step-by-step explanation:

1. 2019 net income would be $141,900

[$150,000 - $8,100] = $141,900

2020 net income would be $173,100

[$165,000 + $8,100] = $173,100

2. We assumed that if the error committed for both year 2019 and 2020 are not corrected, them same income for both year stands.

2019 $165,000

2020 $150,000

It means that balance sheet of 2019 remains overvalued by $8,100