The beforetax income for Novak Co for 2017 was 107000 and 82

The before-tax income for Novak Co. for 2017 was $107,000 and $82,300 for 2018. However, the accountant noted that the following errors had been made:

Interest Expense

14,400

     Cash

14,400

Prepare a schedule showing the determination of corrected income before taxes for 2017 and 2018. (Enter negative amounts using either a negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000). Round answers to 0 decimal places, e.g. 125.)

2017

2018

Income Before Tax

Corrections:

Corrected Income Before Tax

1.		Sales for 2017 included amounts of $37,100 which had been received in cash during 2017, but for which the related products were delivered in 2018. Title did not pass to the purchaser until 2018.
2.		The inventory on December 31, 2017, was understated by $8,900.
3.		The bookkeeper in recording interest expense for both 2017 and 2018 on bonds payable made the following entry on an annual basis.

Solution

2017 2018 Income Before Tax $ 107,000.00 $    82,300.00 Sales errenously recorded in 2017 $ (37,100.00) $    37,100.00 Understatement of 2017 inventory $       8,900.00 $    (8,900.00) Adjustment to Bond Intt Expense $       1,280.00 $    (1,369.60) Repairs Errenously Charged To equipment Accout $    (8,100.00) $    (9,100.00) deprecition recorder on inproperly capitalised equipment $          810.00 $      1,639.00 Net Corrected Income $    72,790.00 $ 101,669.40 Book Value of Bonds Stated Intt Effective Intt Diff 2017 $224000 (240000-16000) $ 14,400.00 $    15,680.00 [224000*.07] $                 1,280.00 2018 225280 (224000+1280) $ 14,400.00 $    15,769.60 [225280*.07] $                 1,369.60 Dep in 2017 = 8100*10% = 810 Dep in 2018 = (8100-810)*10% +9100*.10 = 1639