G. Douglas Corporation prepared the following two income statements:

During the third quarter, the company's internal auditors discovered that the ending inventory for the first quarter should have been $4,400. The ending inventory for the second quarter was correct.
Required:
1. What effect would the error have on total Income from Operations for the two quarters combined? Explain.
2. What effect would the error have on Income from Operations for each of the two quarters? Explain.
3. Prepare corrected income statements for each quarter? Ignore income taxes.

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Second Quarter 20O14 First Quarter 2014 $15,000 Sales Revenue $18,000 Cost of Goods Sold $ 3,000 $ 4,000 Beginning Inventory Purchases 7.000 10,000 12,000 Goods Available for Sale 16,000 Ending Inventory 4,000 9,000 Cost of Goods Sold 6,000 7,000 Gross Profit 9,000 11,000 Operating Expenses 5,000 6,000 $ 5,000 Income from Operations $ 4,000