Splish Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The...

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Splish Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, included product X. Relevant per-unit data for product X are as follows. Estimated selling price $48 Cost 39 Estimated selling costs 13 Normal profit 9 There were 970 units of product X on hand at December 31, 2020. Product X was incorrectly valued at $40 per unit for reporting purposes. All 970 units were sold in 2021. Compute the effect of this error on net income for 2020 and the effect on net income for 2021, and indicate the direction of the misstatement for each year. Net income for 2020 $ 3880 Overstated Net income for 2021 $ 3880 Understated ◆ Splish Company uses the LCNRV method, on an individual-item basis, in pricing its inventory items. The inventory at December 31, 2020, included product X. Relevant per-unit data for product X are as follows. Estimated selling price $48 Cost 39 Estimated selling costs 13 Normal profit 9 There were 970 units of product X on hand at December 31, 2020. Product X was incorrectly valued at $40 per unit for reporting purposes. All 970 units were sold in 2021. Compute the effect of this error on net income for 2020 and the effect on net income for 2021, and indicate the direction of the misstatement for each year. Net income for 2020 $ 3880 Overstated Net income for 2021 $ 3880 Understated ◆

Answer rating: 100% (QA)

Net income for 2020 4850 Overstated Net income for 2021 4850 Understated Explanation T... View the full answer