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):

---

Definitions:

Breach Of Trust And Confidence

This legal term refers to an act that undermines the trust and confidence between parties in a relationship, particularly in employment, where an employer significantly violates an implied term of mutual trust and confidence.

Shareholder Votes

The process by which shareholders express their preferences or make decisions on corporate matters, typically at annual meetings.

Employment Contracts

Legal agreements between employers and employees specifying the terms of employment, including duties, compensation, and duration of the employment.

Negligence Or Mismanagement

Failure to exercise appropriate care or the mismanagement resulting in harm or loss.