An audit revealed that in determining these amounts, the ending inventory for 2016 was overstated by $29,000. The inventory balance on December 31, 2017, was accurately stated. The company uses a periodic inventory system.

1. 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error.
2. 2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction.
3. 2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts?
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5. 

Net Sales Cost of Goods Sold 2015 $2,900,000 1,769,000 $1,131,000 2016 $3,300,000 1,980,000 $1,320,000 2017 $3,400,000 2,108,000 $1,292,000 2018 $3,900,000 2,379,000 $1,521,000 Gross Profit SHERWOOD COMPANY Income Statements (Corrected) 2015 2016 2017 2018 Net Sales Cost of Goods Sold Gross Profit 2015 2016 2017 2018 Before Correction % % % % After Correction % % % % Does the pattern of gross profit percentages lend confidence to your corrected amounts? OYes Ono