Ex. 199 Morton Watch Company reported the following income statement data for a 2-year period. 2016 2017 Sales revenue $260.000 $320.000 Cost of goods sold Beginning inventory 32.000 44.000 Cost of goods purchased 193.000 225.000 Cost of goods available for sale 225,000 269,000 Ending inventory 44.000 57.000 Cost of goods sold 181.000 212.000 Gross profit $79.000 $108.000 Mortan uses a periodic inventory system. The inventories at January 1, 2016, and December 31, 2017, are correct. However, the ending inventory at December 31, 2016, was overstated $5,000. Instructions(a) Prepare correct income statement data for the 2 years.(b) What is the cumulative effect of the inventory error on total gross profit for the 2 years? Q2: For each of the independent events listed below, analyze the impact on the indicated items at the end of the current year by placing the appropriate code letter in the box under each item. Code: 0 = item is overstated U = item is understated NA = item is not affected 1 Aphysical count of goods on hand a the end of the current year resulted in some goods being counted twice The ending inventory in the previous Goods purchased on account in December of the current year and shipped FOB shipping point were recorded as purchases, but were not included in the count of goods on hand on December 31 because they had not arrived by December Goods purchased on account in December of the current year and shipped FOB destination were recorded as purchases, but were not included in the count of goods on hand on December 31 because they had not arrived by December The internal auditors discovered that the ending inventory in the previous period was understated $17.000 and that the onding inventory in the current period was overstated $27.000