Antique Carpets's books show the following data:

In early 2018, auditors found that the ending merchandise inventory for

2015 was understated by $7,000 and that the ending merchandise inventory for

2017 was overstated by $8,000.

The ending merchandise inventory at December31, 2016, was correct.

	2017		2016		2015
Net Sales Revenue		$212,000		$161,000		$169,000
Cost of Goods Sold:
Beginning Merchandise Inventory	$20,000		$25,000		$44,000
Net Cost of Purchases	134,000		95,000		80,000
Cost of Goods Available for Sale	154,000		120,000		124,000
Less: Ending Merchandise Inventory	30,000		20,000		25,000
Cost of Goods Sold		124,000		100,000		99,000
Gross Profit		88,000		61,000		70,000
Operating Expenses		59,000		33,000		30,000
Net Income		$29,000		$28,000		$40,000

Antique Carpets

Income Statement

For the Years Ended December 31, 2017, 2016, and 2015

2017

2016

2015

Ending Merchandise

Ending Merchandise

Inventory Overstated

Inventory Understated

by $8,000

Correct

by $7,000

Net Sales Revenue

Cost of Goods Sold:

Beginning Merchandise Inventory

Net Cost of Purchases

Cost of Goods Available for Sale

Less: Ending Merchandise Inventory

Cost of Goods Sold

Gross Profit

Operating Expenses

Net Income

Requirement 2. State whether each year's net income before your correctionsis understated or overstated, and indicate the amount of the understatement or overstatement.

Year:	Prior to correction net income was
2017
2016
2015