Solution-Determine the net income, In 2023 the company

Determine the net income

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Question - Presented below are the comparative income statements for Watson Industries for the years 2022 and 2023, prior to the information provided in the bulleted list below. Assume no taxes exist.

	2023	2022
Sales	$660,000	$600,000
Cost of Sales	430,000	390,000
Gross Profit	230,000	210,000
Expenses	180,000	170,000
Net Income	$50,000	$40,000
Retained Earnings, Jan. 1	$117,000	$89,000
Net Income	50,000	40,000
Dividends	(15,000)	(12,000)
Retained Earnings, Dec. 31	$152,000	$117,000

In 2024, the company discovered that assets costing $150,000 purchased at the beginning of 2022 had been depreciated straight-line as though their useful life was three years, when it was known the life was actually five years.

In 2023, the company discovered that the ending inventory for 2022 was understated by $13,000.

Prepaid expenses of $4,000 were omitted in 2022.

In the revised financial statements, determine the 2022 Net Income?

a. $57,000

b. $77,000

c. $29,000

d. $69,000

e. $49,000

Reference no: EM133063744

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Determine the net income

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