Dows Company Prepared Income Statements That Reflected Pretax Income of $21,000

question 8

Essay

Dows Company prepared income statements that reflected pretax income of $21,000 for 2018 and $30,000 for 2019.An audit has determined that there were two errors in the inventory amounts as follows:
Determine the correct pretax income amount for each year (show computations;assume the errors were not corrected):

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Definitions:

Successful Corporation

A business entity that consistently achieves its goals, which may include profitability, market share expansion, and sustainable growth.

Continuous

A term describing processes or functions that proceed without interruption or cessation.

Dividends in Arrears

Unpaid dividends on cumulative preferred stock that must be paid out before any dividends can be distributed to common stockholders.

Cumulative Preferred Stock

A type of preferred stock that entitles the holder to receive dividends in arrears before common stockholders can receive any dividends.