Peaceful Carpets books show the following data. In early 2016, auditors found that the ending merchandise inventory

Peaceful Carpets’ books show the following data. In early 2016, auditors found that the ending merchandise inventory for 2013 was understated by $ 4,000 and that the ending merchandise inventory for 2015 was overstated by $ 5,000. The ending merchandise inventory at December 31, 2014, was correct.

Requirements
1. Prepare corrected income statements for the three years.
2. State whether each year’s net income—before your corrections—is understated or overstated, and indicate the amount of the understatement or overstatement.
3. Compute the inventory turnover and days’ sales in inventory using the corrected income statements for the three years. (Round all numbers to twodecimals.)

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2015 2014 2013 Net Sales Revenue Cost of Goods Sold: 201,000 161,000 176,000 Beginning Merchandise Inventory 22,000 Net Cost of Purchases Cost of Goods Available for Sale152,000 Less: Ending Merchandise Inventory 31,000 Cost of Goods Sold 25,000 104,000 129,000 22,000 38,000 92,000 130,000 25,000 130,000 Gross Profit Operating Expenses Net Income 121,000 80,000 56,000 s 24,000 107,000 54,000 26,000 $ 28,000 105,000 71,000 35,000 S 36,000