Following are condensed income statements for Uncle Bill's Home Improvement Center for the years ended December $31,2023$ and $2022$:

$20232022$

Sales $ $541,200$ $ $523,600$

Cost of goods sold $(404,600)(360,400)$

Gross profit $ $136,600$ $ $163,200$

Operating expenses $(103,700)(94,700)$

Net income $($ignoring income taxes$)$ $ $32,900$ $ $68,500$

Uncle Bill was concerned about the operating results for $2023$ and asked his recently hired accountant, $"$If sales increased in $2023,$ why was net income so much less than what it was in $2022?"$ In February of $2024,$ Uncle Bill got his answer: "The ending inventory reported in $2022$ was overstated by $$23,500$ for merchandise that we were holding on consignment on behalf of Kirk's Servistar. We still keep some of their appliances in stock, but the value of these items was not included in the $2023$ inventory count because we don't own them."

Required:

Recast the $2022$ and $2023$ income statements to take into account the correction of the $2022$ ending inventory error.

Calculate the combined net income for $2022$ and $2023$ before and after the correction of the error.

The error was corrected in $2023$ before it was actually discovered in $2024.$

Is there any effect on net income and stockholders' equity in $2024$ due to the error? Uncle Bill was concerned about the operating results for $2023$ and asked his recently hired accountant, $"$If sales increased in $2023,$

why was net income so much less than what it was in $2022?"$ In February of $2024,$ Uncle Bill got his answer: "The ending inventory

reported in $2022$ was overstated by $$23,500$ for merchandise that we were holding on consignment on behalf of Kirk's Servistar. We

still keep some of their appliances in stock, but the value of these items was not included in the $2023$ inventory count because we

don't own them."

Required:

a$.$ Recast the $2022$ and $2023$ income statements to take into account the correction of the $2022$ ending inventory error.

b$.1.$ Calculate the combined net income for $2022$ and $2023$ before and after the correction of the error.

The error was corrected in $2023$ before it was actually discovered in $2024.$

c$.$ Is there any effect on net income and stockholders' equity in $2024$ due to the error?

Complete this question by entering your answers in the tabs below.

Req A

Req B$2$ and C

Recast the $2022$ and $2023$ income statements to take into account the correction of the $2022$ ending inventory error.