Liche Company Reported Net Income of $54,000 in 2022 and $80,000

question 192

Essay

Liche Company reported net income of $54,000 in 2022 and $80,000 in 2023. However, ending inventory was overstated by $6,000 in 2022.
Instructions
Compute the correct net income for Liche Company for 2022 and 2023.

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Definitions:

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the cost of goods sold, indicating the profitability of a company's sales.

Return on Investment

A measure of the profitability of an investment, calculated as the net gain or loss of the investment divided by its initial cost.

Departmental Contribution

The amount of income earned by a specific department after direct costs associated with the department have been subtracted.

Overhead

The ongoing administrative, general, and maintenance expenses incurred during the production process, not including direct labor or materials costs.