imart Watch uses a perpetual inventory system. The inventory amounts on January 1,2023, and December 31,2024 , are correct. However, the ending invento. 1,2023 , was overstated by $6,000. instructions a. Prepare correct income statements for 2023 and 2024 . b. What is the cumulative effect of the inventory error on total gross profit for the two years? c. Explain in a letter to the president of Smart Watch Company what has happened; that is, explain the nature of the error and its effect on the financial stater Determine LCNRV valuation. E6.13 (L. 5) AP Gloria's Gift Shop uses a perpetual inventory system and the FIFO cost formula for valuing inventory. The company is now in the pro comparing the cost of its inventory with its net realizable value. The following data are available at Gloria's Gift Shop's year end, December 31 : er Unit Instructions a. Determine the lower of cost and net realizable value of the ending inventory assuming Gloria's Gift Shop applies LCNRV on individual items. b. Prepare the journal entry required, if any, to record the adjustment from cost to net realizable value. Determine LCNRV valuation. E6.14 (LO 5) AP Cody Company sells three different categories of tools (small, medium, and large). The cost and net realizable value of its inventory of tools are