Analyzing Impact of Inventory Errors on Reporting The records of Largo Company reveal the following. Sales revenue $533,000 Cost of goods sold Beginning inventory $26,000 Purchases 273,000 Goods available for sale 299,000 Ending inventory Gross margin Operating expenses Income (pretax) 65,000 234,000 299,000 156,000 $143,000 The following errors were found, and they have not yet been corrected. 1. Revenues of $13,000 collected in advance are included in Sales Revenue. 2. Accrued operating expenses of $18,200 are not recorded. 3. Goods costing $26,000 are incorrectly included in ending inventory. (They are being held on consignment.) No purchase was recorded. 4. Goods costing $13,000 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 $ 0 Cost of goods sold Beginning inventory S 0 Purchases 0 Goods available for sale 0 Ending inventory 0 0 Gross margin 0 Operating expenses $ 0 0 Income (pretax) b. Determine the amount of overstatement or understatement in the following balance sheet accounts: (1) Inventory, (2) Accounts Payable, (3) Deferred Revenue, (4) Accrued Expenses, and (5) Retained Earnings. Note: If a correction is not required, select "N/A" and leave the amount answer blank (zero). Note: Do not use negative signs with your answers. Account Overstated or Understated Amount Inventory $ 0 Accounts payable $ 0 Deferred revenue $ 0 Accrued expenses $ 0 Retained earnings = $ 0 Check