Condensed income statements for Cozumel Company for two years are shown below. 1 answer below »

Condensed income statements for Cozumel Company for two years are shown below.

 

 

20×7

20x6Sales

Cost of goods sold$252,000

150,000$210,000

108,000Gross margin

Operating expenses$102,000

60,000$102,000

60,000

Income before income taxes

$ 42,000

$ 42,000

After the end of 20×7, the company discovered that an error had resulted in an $18,000 understatement of the 20×6 ending inventory. Compute the corrected income before income taxes for 20×6 and 20×7.

What effect will the error have on income before income taxes and stockholders’ equity for 20×8?

 

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