During the course of your examination of the of Burnett Co., a new client, for the year ended December 31, 2019, you discover the following:
• Inventory at January 1, 2019, was understated by $6,000.
• Inventory at December 31, 2019, was overstated by $5,000.
During 2019, the company received a $1,000 cash advance from a customer for merchandise to be manufactured and shipped during 2020. It had credited the $1,000 to sales revenue. The company’s gross profit on sales is 50%.
Net income reported on the 2019 income statement (before reflecting any adjustments for the above items) is $20,000.
Required:
What is the correct net income for 2019?
