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nics Company in quality form and in the journal provided PART II: (20 points) See specific problem instructions. 5. In early 2020, auditors found that the ending merchandise inventory for 2017 was understated by S5,000 and that the ending merchandise inventory for 2019 was overstated by $6,000. The ending merchandise inventory at December 31, 2018, was correct. Use the following to answer parts I and II. 2019 2018 2017 $178,000 $204,000 $168,000 Net Sales Revenue Cost of Goods Sold: Beginning Merchandise Inventory $20,000 $26,000 $39,000 Net Cost of Purchases 136,000 92,000 80,000 Cost of Goods Available for Sale 156,000 118,000 119,000 Less: Ending Merchandise Inventory 32,000 20,000 26,000 Cost of Goods Sold 124,000 80,000 53,000 Gross Profit 98,000 70,000 40,000 93,000 85,000 Operating Expenses 53,000 Net Income $27,000 $30,000 $32,000 -Pompany in quality form and smal rovided 1. Prepare corrected income statements for the three years. Peaceful Carpets Income Statement For the Years Ended December 31, 2019, 2018, and 2017 2019 2018 2017 Net 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 II. State whether each year's net income - before your corrections - is understated or overstated, and indicate the amount of the understatement or overstatement. Year: Prior to correction net income was 2019 2018 2017