Darlington Inc

question 5

Essay

Darlington Inc.reported the following amounts on their financial statements for Year 1,Year 2 and Year 3:
 

It was discovered early in Year 4 that the ending inventory at the end of Year 1 was overstated by $6,000 and the ending inventory at the end of Year 2 was understated by $2,500.The ending inventory at the end of Year 3 was correctly reported.
Required:
Ignoring income taxes,determine the correct amounts of cost of goods sold and net income for each of the three years and total assets at the end of each the three years and complete the table below.Show your work.

Supporting calculations:

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Definitions:

Shear

The force or stress that causes materials or layers to slide past one another, often leading to deformation or structural failure.

Confining Pressure

The pressure exerted uniformly on a rock body from all directions, which can affect the rock's physical properties and behavior.

Vertical Tension

Stress that acts upwards or downwards along a vertical plane, affecting the Earth's crust and can lead to the formation of geological features.

Dip-Slip Fault

A fault on which the relative movement is parallel to the dip of the fault.