Condensed income statements for Elan Company for two years are shown below.

After the end of 20x4, the company discovered that an error had resulted in a $9,000 understatement of the 20x3 ending inventory.
Compute the corrected income before income taxes for 20x3 and 20x4. What effect will the error have on income before income taxes and owners' equity for 20x5?

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Sales Cost of goods sold Gross margin Operating expenses Income before income taxes 20x4 20x3 $126,000 75,000 $105,000 54,000 $ 51,000 30,000 $ 51,000 30,000 $ 21,000 $ 21,000