1. During 2009 Bhuvan Ltd discovered that goods sold in 2008 were incorrectly included in inventory as at 31 03 2008 at Rs
16250
Bhuvan Ltd accounts for 2009 shows sales of Rs 2,60,000 and cost of goods sold of Rs 2,16, 250 ( it includes
Rs 16,250 for the error in the opening inventory) and income tax of Rs. 13, 125
In 2008 Bhuvan Ltd
sales 1,83,750
Cost of goods sold -1,33,750
Profit before tax 50,000
Income Tax -15,000
Profit after tax 35,000
2008 opening retained earnings was Rs 50,000 and closed retained earnings was Rs 85,000
Income tax rate was 30% in both the years and there are no other expenses or income
Share capital was Rs 12,500 and except for retained earning there are no other items in the component of
equity
Show the accounting treatment for the restatement of error.