An audit revealed that in determining these amounts, the ending inventory for 2019 was understated by $48.
Required:
1. Revise these statements of earnings to reflect the correct amounts. (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.)
2021
2020
2019
2018
Sales revenue
$
3,325
$
3,750
$
4,000
$
4,275
Cost of sales
2,155
2,277
2,432
2,763
Gross profit
1,170
1,473
1,568
1,512
Operating expenses
620
643
668
672
Pretax earnings
550
830
900
840
Income tax expense (30%)
165
249
270
252
Net earnings
$
385
$
581
$
630
$
588
2. Did the error affect the cumulative net earnings for the four-year period?
multiple choice
Not affected
Affected
3. What effect did the error have on the income tax expense for 2019 and 2020? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.)
Answer & Explanation
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