Assume that Volleyball Pro Equipment had $1,000,000 of sales during each of three consecutive years, and it purchased merchandise costing $400,000 during each of the years. It also maintained a $150,000 inventory from the beginning to the end of the three-year period. However, it made an error at the end of the first year, 2020, that caused its ending 2020 inventory to appear on its statements at $130,000 rather than the correct $150,000.

Required: 1. Calculate the actual amount of the companys gross profit in each of the years.

2. Prepare a comparative income statement to show the effect of this error on the companys cost of goods sold and gross profit in 2020, 2021, and 2022.