Adjusted total assets & Profit (video below)

ABC Co has total assets of $162,500 and profit for the year of $37,500 recorded in the financial statements for the year ended 31 December 20X4. Inventory costing $12,500, with a resale value of $18,750, was received into the warehouse on 3 January 20X5 and included in the inventory value that was recorded in the financial statements at 31 December 20X4.

What would the total assets figure in the Statement of Financial Position, and the adjusted profit for the year figure, be after adjusting for this error?

Answer

$162,500 – $12,500  = $150,000. (Total assets)

$37,500 – $12,500 = $25,000. (Profit for the year)

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