During January 2013, What Snew Inc $\begin{array} { | l | l | } \hline \text { Computation } & \text { Answer } \\\hline\end{array}$

question 16

Essay

During January 2013, What Snew Inc. discovered that (a) the 2012 ending inventory had been understated by $2,000 (and never had been corrected by the accountants) and (b) 2013 credit purchases were understated (not recorded) by $800 (to be paid January 15, 2013). Before correction of errors, pre-tax income was: 2012, $44,000 and 2013, $52,000. Assume a periodic inventory system.
Required:
(a) Complete the following to show the correct amounts (show computations): $\begin{array} { | l | l | } \hline \text { Computation } & \text { Answer } \\\hline\end{array}$
2012 correct pre-tax income _______________________ $_______________ 2013 correct pre-tax income _______________________ $_______________ (b) Give any entry (entries) that would be required on January 2, 2013, that should be made to correct the accounts (if none is required, so state). Ignore income taxes and assume the books for 2013 have not been closed.

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Definitions:

Balanced Processing

A leadership quality where individuals objectively analyze relevant data before making decisions, ensuring diverse viewpoints are considered.

Objective Analysis

The evaluation or examination of facts or evidence in a manner that is unbiased and not influenced by personal feelings or opinions.

LMX Differentiation

The degree to which leaders in the Leader-Member Exchange theory develop varying quality relationships with members of their group or team.

LMX Relationships

Leader-Member Exchange relationships, a model focusing on the dyadic (two-way) relationship between leaders and followers, affecting various workplace outcomes.