Aruba Inc. reported the following partial income statement data for the years ended December 31, 2012 and 2011:

Merchandise inventory was reported in the current assets section of the statement of financial position at $44,000, $52,000, and $49,000 at the end of 2010, 2011, and 2012, respectively. The ending inventory amounts for 2010 and 2012 are correct. However, the ending inventory at December 31, 2011, is understated by $8,000.
Instructions
(a) Prepare correct income statements for 2011 and 2012 through to gross profit.
(b) What is the cumulative effect of the inventory error on total gross profit for these two years?
(c) Calculate the gross profit margin for each of these two years, before and after the correction

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Sales Cost of goods sold Gross profit 2012 $265,000 205,000 60,000 2011 $250,000 194,000 56,000