Question

P7-9 Analyzing and Interpreting the Effects of Inventory Errors L07-7 The following Information apples to the questlons displayed below The income statement for Pruitt Company summarized for a four-year period shows the following: 2016 2017 2018 2019 Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (40%) Net income 2,028,000 2,469,000 S 2,704,000 $ 2,995,000 2,109,000 886,000 533,000 353,000 141,200 1,615,000 1,767,000 937,000 533,000 404,000 161,600 1,504,000 854,000 507,000 347,000 138,800 524,000 482,000 42,000 16,800 $ 25,200 $ 208,200 $ 208,200 $ 211,800 An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $12,000. The company uses a periodic inventory system References