Grants Corporation prepared the following two income statements (simplified for illustrative purposes): First Quarter $ 12, 900 Second Quarter $18, 100 Sales revenue Cost of goods sold Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Expenses Pretax income $ 4, 100 3, 200 7,300 3, 700 $ 3, 700 12,500 16, 200 9, 200 3,600 9, 300 4, 800 $ 4,500 7,000 11, 100 5, 800 $ 5,300 During the third quarter, it was discovered that the ending inventory for the first quarter should have been $4,230. Required: 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. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Reg 4 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? 1. Effect on combined pretax income 2. Quarter(s) Req 1 and 2 Req3 Reg 4 Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement. 1st Quarter Incorrect Correct $ 4,100 $ 4.100 2nd Quarter Correct Incorrect Error Error No error 9,200 9,200 No error Beginning inventory Ending inventory Cost of goods sold Gross profit Pretax income