Buffalo Corporation has used the accrual basis of accounting for several years. A review of the records, however, indicates that some expenses and revenues have been handled on a cash basis because of errors made by an inexperienced bookkeeper. Income statements prepared by the bookkeeper reported $27,700 net income for 2019 and $34,300 net income for 2020. Further examination of the records reveals that the following items were handled improperly. Rent was received from a tenant in December 2016. The amount, $1,030, was recorded as revenue at that time even though the rental pertained to 2017.

Corrected net income for 2019 = 23,750.

Corrected net income for 2020 = $36,210

Explanation:

For the year 2019, below are the particulars and the amount recorded for each particulars.

Net income => $27,700.

Rent received in 2019 => - $1,030.

Salaries and Wages not accrued, 12/31/18 => - $1190.

Salaries and Wages not accrued, 12/31/19 => - $1290.

Inventory of Supplies, 12/31/18 = - 1430.

Inventory of Supplies, 12/31/19 = 990

Corrected net income = 23,750.

For the year 2020, below are the particulars and the amount recorded for each particulars.

Net income => $34,300.

Rent received in 2020 => $1,030.

Salaries and Wages not accrued, 12/31/2020 => - $ 870

Salaries and Wages not accrued, 12/31/19 => $1290.

Inventory of Supplies, 12/31/19 = - 990.

Inventory of Supplies, 12/31/20 = 1450.

Corrected net income = $36,210

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