Answer:
$2,380,500 and $357,500
Explanation:
The movement in the balance of inventory at the start and end of a period is as a result of sales and purchases. While sales reduces the balance in inventory, purchases increases the balance. This may be expressed mathematically as
Opening balance + purchases - cost of goods sold = closing balance
As such, when inventory is overstated at the start of the year, the ending inventory would also be overstated by the same amount, the cost of goods sold would be overstated and net income understated.
Correct amount of asset
= $2406000 - $25500
= $2,380,500
net income for the year
= $332000 + $25500
= $357,500
