Antique Carpets's books show the following data. In early 2020, auditors found that the ending merchandise inventory for 2017 was understated by $8,000 and that the ending merchandise inventory for 2019 was overstated by $9,000. The ending merchandise inventory at December 31, 2018, was correct.

Requirements
1. Prepare corrected income statements for the three years.
2. State whether each year's net income-before your corrections-is understated or overstated, and indicate the amount of the understatement or overstatement.
3. Compute the inventory turnover and days' sales in inventory using the corrected income statements for the three years. (Round all numbers to two decimals.)

Transcribed Image Text:

2019 2017 2018 $ 170,000 Net Sales Revenue Cost of Goods Sold: $ 161,000 $ 212,000 Beginning Merchandise Inventory Net Cost of Purchases Cost of Goods Available for Sale Less: Ending Merchandise Inventory Cost of Goods Sold Gross Profit Operating Expenses Net Income $ 41,000 131,000 100,000 128,000 22,000 127,000 28,000 153,000 119,000 93,000 63,000 $ 30,000 106,000 55,000 28,000 $ 27,000 99,000 71,000 39,000 $ 32,000