Horner Watch Company reported the following income statement data for a 2-year period.

Horner 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, was understated $6,000.

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 Horner Watch Company what has happened, i.e., the nature of the error and its effect on the financialstatements.

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2013 2014 210,000 $250.000 Sales revenuc Cost of goods sold 32,000 173,000 Beginning inventory Cost of goods purchased Cost of goods available for sale Ending inventory 44,000 202,000 205,000 246,000 52,000 194,000 $ 49,000 56,000 44,000 61,000 Cost of goods sold Gross profit