Healthy Bite Mart reported the following comparative income statement for the years ended November 30, 2010 and 2009.

During 2010, Healthy Bite Mart discovered that the 2009 ending inventory, as previously reported, was understated by $2,500.
Requirements 1. Prepare the corrected comparative income statement for the two-year period, complete with a heading for the statement.
2. What was the effect of the error on net income for the two years combined? Explain your answer.

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Healthy Bite Mart Comparative Income Statements For the years ended November 30, 2010 and 2009 2010 Sales Revenue $137,000 2009 $120,000 Cost of Goods Sold: Beginning Inventory $15,500 $11,000 Net Purchases 70,000 69,000 Cost of Goods Available 85,500 80,000 Ending Inventory 18,500 15,500 Cost of Goods Sold 67,000 64,500 Gross Profit 70,000 55,500 Operating Expenses 24,000 20,000 Net Income $ 46,000 $ 35,500