A B C D E F A physical inventory of Manchester Company taken at December 31 reveals the following. 2 Item Units Cost per Unit Market per Unit 3 Caraudio equipment 4 Speakers 345 $ 90 $ 98 5 Stereos 260 111 100 6 Amplifiers 326 86 95 7 Subwoofers 204 52 41 8 Security equipment 9 Alarms 480 150 125 10 Locks 291 93 84 11 Cameras 212 310 322 12 Binocular equipment 13 Stabilizers 185 70 84 14 Tripods 170 97 105 15 Required 16 1. Compute the lower of cost or market for the inventory applied separately to each item. 17 2. If the market amount is less than the recorded cost of the inventory, then record the LCM adjustment 18 to the Merchandise Inventory account. 19 20London Company's financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is overstated by $18,000 and Year 2 ending inventory is understated by $26,000. For Year Ended December 31 Year 1 Year 2 Year 3 (a) Cost of goods sold $207,200 $213,800 $197,030 (b) Net income 175,800 212,270 184,910 (c) Total current assets 276,000 277,500 272,950 (d) Total equity 314,000 315,000 346,000 Required 1. For each key financial statement figure-(a), (b), (c), and (d) above-prepare a table similar to the following to show the adjustments necessary to correct the reported amounts. For Year Ended December 31 Year 1 Year 2 Year 3 Reported amount Adjustments for Year 1 error Year 2 error Corrected amount 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? Explain