E22-9 (02.3) (Change in Estimate and Error; Financial Statements) Presented below are the comparative income and retained earnings statements for Denise Habbe Inc. for the years 2017 and 2018 2018 $340,000 200,000 140,000 88,000 $ 52,000 2017 $270,000 142,000 128,000 50,000 $78,000 $ 72,000 78,000 (25,000) $125,000 Sales Cost of sales Gross profit Expenses Net income Retained earnings (Jan. 1) Net income Dividends $125,000 52,000 (30,000) $147,000 Retained earnings (Dec. 31) The following additional information is provided 1. In 2018, Denise Habbe Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The assets were purchased at the beginning of 2017 for $100,000 with an estimated useful life of 4 years and no salvage value (The 2018 income statement contains depreciation expense of $30,000 on the assets purchased at the beginning of 2017.) 2. In 2018, the company discovered that the ending inventory for 2017 was overstated by $24,000; ending inventory for 2018 is correctly stated Requirea: Using the information in your book for E22-9 please do the following: 1. Prepare restated Income Statements for 2017 and 2018. 2. Prepare restated Statement of Retained Earnings for 2017 and 2018