Grants Corporation prepared the following two income statements (simplified for illustrative purposes): First Quarter Second Quarter 12,200 Sales revenue 18,800 Cost of goods sold 4,100 3,600 Beginning inventory 12,700 Purchases 3,100 7,200 Goods available for sale 16,300 Ending inventory 3,600 9,000 3,600 Cost of goods sold 11,500 Gross profit 8,600 Expenses 4,800 5,700 5,800 3,800 Pretax income During the third quarter, it was discovered that the ending inventory for the first quarter should have been $4,030. Required: 1. What effect did this error have on the combined pretax income of the two quarters? O Increase by $430 O Decrease by $430 No effect 2. Which quarters (if any) EPS amount were affected by this error? O First Quarter only Second Quarter only O Both quarters Neither quarter