Condensed income statements for Saunders Company for two P.0.1 years are presented here.

After the end of 19x7, it was discovered that an error had been made in 19x6.
Ending inventory in 19x6 should have been $12,000 instead of $13,000. Deter¬
mine the corrected net income for 19x6 and 19x7.

a. Did the error understate or overstate cost of goods sold for 19x6?

b. Did the error understate or overstate net income for 19x6?

c. What is the amount of total net income for the two-year period with the error ($13,000) and corrected ($12,000)?

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Net Sales Cost of Goods Sold: Merchandise Inventory (beginning) Purchases (net) Goods Available for Sale Less: Merchandise Inventory (ending) Cost of Goods Sold Gross Profit Expenses Net Income 19x7 $13 000 00 47 000 00 $60 000 00 14 000 00 $91 000 00 46 000 00 $45 000 00 23 00000 $22 000 00 19x6 $150 00 00 49 000 00 $64 000 00 13 000 00 $98 0 0 0 00 51 000 00 $47 000 00 21 0 0 0 00 $26 000 00