Determine corrected net incomes
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6. Correction of errors.
Unruh Company reported net incomes for a three-year period as follows:
2003, $62,000; 2004, $63,000; 2005, $60,000.
In reviewing the accounts in 2006 after the books for the prior year have been closed, you find that the following errors have been made in summarizing activities:
2003 2004 2005
Overstatement of ending inventory $14,000 $17,000 $8,000
Understatement of accrued advertising expense 2,200 4,000 2,400
Instructions
(a) Determine corrected net incomes for 2003, 2004, and 2005.
(b) Give the entry to bring the books of the company up to date in 2006, assuming that the books have been closed for 2005.
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Solution Summary
The expert determines the corrected net income.
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