Shockley Co. reported the following amounts in its financial statements:

In making the physical counts of inventory, the following errors were made:

? Inventory on December 31, 2020: understated $70,000

? Inventory on December 31, 2021: overstated $32,000

Required

For each of the preceding financial statement items?(a), (b), (c), and (d)?prepare a schedule similar to the following and show the adjustments that would have been necessary to correct the reported amounts.

Analysis Component: What is the error in the aggregate profit for the three-year period that resulted from the inventory errors? Explain why this result occurs. Also explain why the understatement of inventory by $70,000 at the end of 2020 resulted in an understatement of equity by the same amount that year.

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Financial Statements for Year Ended December 31 2020 2021 2022 (a) Cost of goods sold. (b) Profit. $ 770,000 231,000 1,100,000 $ 715,000 220,000 $ 847,000 275,000 1,265,000 1,430,000 1,155,000 (c) Total current assets (d) Equity. 1,287,000 1,232,000 2021 2022 2020 Cost of goods sold: Reported. Adjustments: Dec. 31/20 error. Dec. 31/21 error Corrected.