Fill in the missing blanks?

Grants Corporation prepared the following two income statements (simplified for illustrative purposes):

	First Quarter						Second Quarter
Sales revenue			$	11,000							$	18,000
Cost of goods sold
Beginning inventory	$ 4,000						$	3,800
Purchases	3,000							13,000
Goods available for sale	7,000							16,800
Ending inventory	3,800							9,000
Cost of goods sold				3,200								7,800
Gross profit				7,800								10,200
Expenses				5,000								6,000
Pretax income			$	2,800							$	4,200

During the third quarter, it was discovered that the ending inventory for the first quarter should have been $4,400.

Nessasary:

1. What effect did this error have on the combined pretax income of the two quarters?

2. Which quarter's or quarters' (if any) EPS amounts were affected by this error?

3. Prepare corrected income statements for each quarter.

4. Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement.

Prepare corrected income statements for each quarter. First Quarter Second Quarter $ $ 11,000 18,000 Sales revenue Cost of goods sold: Beginning inventory Purchases $ 4,000 3,000 4,400 13,000 Goods available for sale Ending inventory 7,000 4,400 17,400 9,000 Cost of goods sold Gross profit Expenses 2,600 8,400 5,000 8,400 9,600 6,000