Great Foods Grocery reported the following comparative income statements for the years ended April 30, 2019 and 2018:

During 2019, Great Foods Grocery discovered that ending 2018 merchandise inventory was overstated by $4000

Requirement 1:

Requirement 2:

Options:

2018 $ 124,000 $ Great Foods Grocery Income Statements Years Ended April 30, 2019 and 2018 2019 Sales Revenue $ 139,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 18,000 75,000 Net Cost of Purchases Cost of Goods Available for Sale 93,000 Less: Ending Merchandise Inventory 17,000 76,000 Cost of Goods Sold Gross Profit 63,000 Operating Expenses 23,000 $ 40,000 Net Income 12,000 72,000 84,000 18,000 66,000 58,000 16,000 $ 42,000 Requirement 1. Prepare corrected income statements for the two years. Great Foods Grocery Income Statements Years Ended April 30, 2019 and 2018 2019 2018 Sales Revenue Cost of Goods Sold: Beginning Merchandise Inventory Net Cost of Purchases Cost of Goods Available for Sale Less: Ending Merchandise Inventory Cost of Goods Sold Gross Profit Operating Expenses Net Income Requirement 2. State whether each year's net income-before your correctionsis understated or overstated, and indicate the amount of the understatement or overstatement. Year: Net income prior to correction 2019 2018 correct overstated by understated by