Chief Auto Supply reported the following comparative income statement for the years ended September 30, 19X8 and 19X7:

During 19X8 accountants for the company discovered that ending 19X7 inventory was overstated by \(\$ 1,500\). Prepare the corrected comparative income statement for the two-year period. What was the effect of the error on net income for the two years combined? Explain your answer.

Transcribed Image Text:

CHIEF AUTO SUPPLY INCOME STATEMENTS FOR THE YEAR ENDED SEPTEMBER 30, 19X8 Sales revenue $137,300 19X7 $121,700 Cost of goods sold: Beginning inventory. $14,000 $12,800 Net purchases.. 72,000 66,000 Cost of goods available. 86,000 78,800 Ending inventory. 16,600 14,000 Cost of goods sold.. 69,400 64,800 Gross margin. 67,900 56,900 Operating expenses 30,300 26,100 Net income... $ 37,600 $ 30,800