Belinda Corp.reported $80, 000 of net income for 2010.The following errors were then discovered: -Ending 2010 accrued expense was overstated by $\$ 2,000$
-2010 eame drevenue was overstated by $\$ 3,000$ .
-Ending 2010 prepaid expense was overstated by $\$ 500$ .
Ignoring income taxes, the correct 2010 net income is

A) $85, 500
B) $84, 500
C) $78, 500
D) $76, 500

Question

Belinda Corp.reported $80, 000 of net income for 2010.The following errors were then discovered: -Ending 2010 accrued expense was overstated by

\$ 2,000

-2010 eame drevenue was overstated by

\$ 3,000

.
-Ending 2010 prepaid expense was overstated by

\$ 500

.
Ignoring income taxes, the correct 2010 net income is

A) $85, 500
B) $84, 500
C) $78, 500
D) $76, 500

Athena Hoover · Accepted Answer

Final Answer : C, Explanation :  The net income should be adjusted by subtracting the overstated revenue ($3,000) and adding back the overstated accrued expense ($2,000) and prepaid expense ($500). This results in a decrease of $500, making the correct net income $78,500.

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