Jacob's Upholstery, Inc., reported the following comparative income statements for the years ended September 30, 2016 and 2015.

During 2016, Jacob’s Upholstery, Inc., discovered that the 2015 ending inventory, as previously reported, was understated by $1,500.

Requirements
1. Prepare the corrected comparative income statements for the two-year period, complete with a heading for the statements.
2. What was the effect of the error on net income for the two years combined? Explain your answer.

Transcribed Image Text:

Jacob's Upholstery, Ino. Comparative Income Statements For the Years Ended September 30, 2016 and 2015 2016 $294,000 2016 $286,000 Sales Revenue Cost of Goods Sold: Beginning Inventory Net Purchases $14,500 162,000 176,500 19,000 $14,000 157,000 171,000 14,500 Cost of Goods Available for Sale Ending Inventory 156.500 129,500 33,000 $ 96,500 Cost of Goods Sold 157,500 136,500 34,000 $102.500 Gross Profit Operating Expenses Net Income