Holcomb Company reported these income statement data for a 2-year period.

Holcomb Company uses a periodic inventory system. The inventories at January 1, 2013, and December 31, 2014, are correct. However, the ending inventory at December 31, 2013, is overstated by $8,000.
Instructions
(a) Prepare correct income statement data for the 2 years.
(b)What is the cumulative effect of the inventory error on total gross profit for the 2 years?
(c) Explain in a letter to the president of Holcomb Company what has happened—that is, the nature of the error and its effect on the financialstatements

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2014 2013 Sales revenue Beginning inventory Cost of goods purchased Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross proft $250,000 $210,000 32,000 173,000 205,000 40,000 165,000 63,000 45,000 40,000 202,000 242,000 55,000 187,000