The december inventory should have been

Inventories	6 - 63

Ex. 231

Speer's Hardware Store prepared the following analysis of cost of goods sold for the previous three years:

	2019	2020
	€40,000	€18,000
	50,000	55,000	70,000
Cost of goods available for sale	90,000	73,000	95,000
	18,000	25,000
	£ 72,000	£ 48,000

Net income for the years 2019, 2020, and 2021 was €70,000, €60,000, and €65,000, respectively. Since net income was consistently declining, Mr. Speer hired a new accountant to investigate the cause(s) for the declines.

The accountant determined the following:

Instructions
Determine the correct net income for each year. (Show all computations.)

Ans: N/A, LO: 3, Bloom: AN, Difficulty: Hard, Min: 25, AACSB: Analytic, AICPA BB: Legal/Regulatory Perspective, AICPA FN: Reporting, AICPA PC: Problem Solving, IMA: Reporting

		2019	2020
		€ 40,000	€21,000	€17,000
Cost of goods purchased			55,000
		110,000	76,000
Ending inventory 12/31		(2) 21,000
		€ 89,000	€ 59,000
		2019	2020	2021
Net Income previously reported		€70,000	€60,000
		72,000	48,000
		(89,000)	(59,000)	(47,000)
Corrected Net Income		€ 53,000	€ 49,000
		€20,000
	Additional ending inventory	€3,000
(3)		€8,000