X Ltd, maker of DVDs and computer consumables, reported the following comparative income statement for the years ended 30 September 20x5 and 20x4:

X Ltd’s directors and shareholders are pleased by the company’s increase in sales and net profit during 20x5. Then they discover that the closing stock of 20x4 was understated by £6,000.

Required 

Prepare the corrected comparative income statement for the two-year period.
How well did X Ltd really perform in 20x5, as compared with 20x4? What caused the evaluation of 20x5 to change so dramatically? Discuss in detail.

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X Ltd Income statement Years ended 30 September 20x5 and 20x4 20x5 20x4 Sales revenue 249,000 222,000 Cost of goods sold: Opening stock 18,000 11,000 Purchases 75,000 64,000 Cost of goods available 93,000 75,000 Closing stock (19,000) (18,000) Cost of goods sold 74,000 57,000 Gross profit 175,000 165,000 Operating expenses 130,000 123,000 Net profit 45,000 42,000