The income statements for four consecutive years for Clement Company reflected the following summarized amounts:

Subsequent to the development of these amounts, it has been determined that the physical inventory taken on December 31, 2011, was understated by \(\$ 3,000\).
Required:
1. Revise the income statements to reflect the correct amounts, taking into consideration the inventory error.
2. Compute the gross profit percentage for each year

(a) before the correction and

(b) after the correction. Do the results lend confidence to your corrected amounts? Explain.
3. What effect would the error have had on the income tax expense, assuming an average tax rate of 30 percent?

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2013 2012 2011 2010 Sales revenue $58,000 $62,000 $51,000 $50,000 Cost of sales 37,000 43,000 35,000 32,500 Gross profit 21,000 19,000 16,000 17,500 Operating expenses 12,000 14,000 12,000 10,000 Pretax profit $ 9,000 S 5,000 $ 4,000 $ 7,500