HCI, Inc. understated its ending inventory by $6,000 in 2006. Assume HCI, Inc. has a 25 percent

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Question:

HCI, Inc. understated its ending inventory by $6,000 in 2006. Assume HCI, Inc. has a 25 percent income tax rate. Which of the following statements about the financial reports of HCI, Inc. for 2006 is correct? Answer

		Ending inventory will be overstated by $4,500.
		Ending inventory will be understated by $4,500.
		Cost of sales will be overstated by $1,500.
		Net income will be understated by $4,500.