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  3. following are condensed income statements for uncle bils home improvement...

Question: following are condensed income statements for uncle bils home improvement...

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Following are condensed income statements for Uncle Bils Home Improvement Center for the years ended December 31, 2017, and 2016: 333,200 23 200 51.400 2017 Sales Cost of goods sold Gross profit Operating expenses S 405,100 303,000 102,100 Net income (ignoring income taxes) S 23,700 Uncle Bill was concerned about the operating esults for 2017 and asked his recent y hired accountant sales increased in 2017, why was net income less than half of what it was in 2016? In February of 2018, Uncle Bill got his answer: The ending inventory reported in 2016 was overstated by $17,500 for merchandise that we were holding on consignment on behalf of Kirks Servistar. We still keep some of their appliances in stock, but the value of these items was not included in the 2017 inventory count because we dont own them. Required: a. Recast the 2016 and 2017 income statements to take into account the correction of the 2016 ending inventory error. 2017 S 405,100 393,200 2016 Sales Cost of goods sold Gross profit Operating expenseS Net income (ignoring income axxes b-1. Calculate the combined net income for 2016 and 2017 before and after the correction of the error Net Income Total 2017 2016 Bofore correction of After corroction of error b-2. The error was corrected in 2017 before it was actually discovered in 2018. True False c. Is there any effect on net income and stockholders equity in 2018 due to the error? Yes No

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