Dalez Corporation prepared the following two statements of earnings for the current year $($simplified for illustrative purposes$)$:

During the third quarter, it was discovered that the ending inventory for the first quarter should have been $$4,420.$

Required:

What effect did this error have on the pretax earnings of each quarter and of the two quarters combined?

$420$ Understated

$420$ Overstated

No error

Did this error affect the earnings per share amounts for each quarter?

Yes

No

$[$ONLY DO QUESTION $4]$ Prepare corrected statements of earnings for each quarter.

Set up a schedule with the following headings to reflect the comparative effects of the correct and original amounts on the

statement of earnings: $($Select "Understated" or "Overstated" as applicable. Leave no cells blank; select $"$No error" from the

dropdowns if no error is recognized. Input all amounts as positive values.$)$