Check my work 3 E7-18 (Algo) Analyzing the Effect of an Inventory Error Disclosed in an Actual Note to a Financial Statement L07-7 Several years ago, the financial statements of Montgomery Greeting Cards now part of Nation Salutations, contained the following note ON On July 1, the company announced that it had determined that the inventory had been overstated. The overstatement of Inventory was $8,776,000 Montgomery Greeting Cards reported an incorrect net income amount of $25,792,000 for the year in which the error occurred and the Income tax rate was 40.70 percent Required: 1. Compute the amount of net income that Montgomery Greeting Crds reported after correcting the inventory error 2. Assume that the inventory error was not discovered, Identify the financial statement accounts that would have been incorrect() for the year the error occurred and (b) for the subsequent year. State whether each account was understated, overstated, or had no effect. Complete this question by entering your answers in the tabs below. Dan rad Ranut 8 Help Save & Exit Sub Required: 1. Compute the amount of net income that Montgomery Greeting Cards reported after correcting the inventory errot 2. Assume that the inventory error was not discovered Identify the financial statement accounts that would have been incorrect (o) for the year the error occurred and (6) for the subsequent year State whether each account was understated, overstated, or had no effect Check my work -5 Complete this question by entering your answers in the tabs below. to Required 1 Required 2 Compute the amount of net income that Montgomery Greeting Cards reported after correcting the inventory error, Corected net income quired 2 > Check 00 8 Complete this question by entering your answers in the tabs below. 12.5 points Hook References Required: Required 2 Assume that the inventory error was not discovered. Identify the financial statement accounts that would have been incorrect (a) for the year the error occurred and (b) for the subsequent year. State whether each account was understated, overstated, or had no effect. Account Year of Error Subsequent Year Beginning inventory Cost of goods sold Ending inventory Income tax expense Not income Retained earnings Taxes payable