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

question 67

Essay

Dows Company prepared income statements that reflected pretax income of $21,000 for 2015 and $30,000 for 2016. An audit has determined that there were two errors in the inventory amounts as follows:
Amount Reported
Correct Amount
Ending inventory, 2015
$15,000
$14,000
Ending inventory, 2016
18,000
16,000
Required:
Determine the correct pretax income amount for each year (show computations; assume the errors were not corrected):

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Definitions:

Pressure Tactic

A strategic method used to influence or persuade others by applying stress or discomfort, often seen in negotiations or conflict situations.

Coalition Tactic

A strategy where individuals or groups come together to form a temporary alliance to achieve a common goal, particularly in negotiations or organizational politics.

Exchange Tactic

A strategy used in negotiations or interactions where one party offers something in return for something from the other party, emphasizing reciprocity.

Domination

The exercise of control or influence over someone or something, often in a manner that restricts freedom or autonomy.