Analyzing Impact of Inventory Errors on Reporting The records of Largo Company reveal the following. Sales revenue $164,000 Cost of goods sold Beginning inventory $8,000 Purchases 84,000 Goods available for sale 92,000 Ending inventory 20,000 72,000 Gross margin 92,000 Operating expenses 48,000 Income (pretax) $44,000 The following errors were found and they have not been corrected. 1. Revenues collected in advance of $4,000 are included in Sales Revenue. 2. Accrued operating expenses not recognized of $5,600. 3. Goods costing $8,000 are incorrectly included in ending inventory (they are being held on consignment from Carter Inc.). No purchase was recorded. 4. Goods costing $4,000 are correctly included in ending inventory; however, no purchase was recorded (assume a credit purchase). a. Prepare a revised income statement on a correct basis. Note: Do not use negative signs with your answers. Sales revenue $ Cost of goods sold Beginning inventory $ Purchases Goods available for sale Ending inventory Gross margin Operating expenses Income (pretax) b. Identify incorrect amounts on the balance sheet if the errors were not corrected. The following errors were found and they have not been corrected. 1. Revenues collected in advance of $4,000 are included in Sales Revenue. 2. Accrued operating expenses not recognized of $5,600. 3. Goods costing $8,000 are incorrectly included in ending inventory (they are being held on consignment from Carter Inc.). No purchase was recorded. 4. Goods costing $4,000 are correctly included in ending inventory; however, no purchase was recorded (assume a credit purchase). a. Prepare a revised income statement on a correct basis. Note: Do not use negative signs with your answers. Sales revenue $ Cost of goods sold Beginning inventory $ Purchases Goods available for sale Ending inventory Gross margin Operating expenses Income (pretax) b. Identify incorrect amounts on the balance sheet if the errors were not corrected. Note: If a correction is not required, select "N/A" and leave the amount answer blank (zero). Account Overstated or Understated Amount Cash Inventory $ Accounts receivable Accounts payable $ Deferred revenue $ Accrued expenses $ Retained earnings $ $