A & R Industrial Supply shows the following financial statement data for 2008, 2009, and 2010. Prior
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A & R Industrial Supply shows the following financial statement data for 2008, 2009, and 2010. Prior to issuing the 2010 statements, auditors found that the ending inventory for 2008 was understated by \($8,000\) and that the ending inventory for 2010 was overstated by \($9,000.\) The ending inventory at December 31,2009, was correct.
Requirements 1. State whether each year’s net income before corrections is understated or overstated and indicate the amount of the understatement or overstatement.
2. Prepare corrected income statements for the three years.
3. What is the impact on the 2010 income statement if the 2008 inventory error is left uncorrected?
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