Prepare the corrected income statement for the given year

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Reference no: EM13256664

Boswell Electric prepared the following condensed incomestatements for two successive years:

Particulars

2008

(Rs.)

2007

(Rs.)

Sales

Cost of goods sold

Gross profit on sales

Operating expenses

Net income

200,000

150,000

50,000

30,000

20,000

160,000

100,000

60,000

20,000

40,000

At The end of the year 2007, the inventory was understated byRs. 10,000, but the error was not discovered until after theaccounts had been closed and financial statements prepared at theend of the year 2008. The balance sheets for the two years showedowner's equity of Rs. 50,000 at the end of the year 2007 andRs. 60,000 at the end of the year 2008. (Boswell is organized as asole-proprietorship and does not incur income taxes expense.)

Required:

1. Prepare the corrected income statement for the year 2007 and2008

2. What correction, if any, should be made in the amounts of thecompany's owner's equity at the end of the year 2007and 2008?

Reference no: EM13256664

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