Misstep Company has great expertise in some areas, but counting is not one of them. Since 2017 they have been miscounting ending inventory and applying FIFO incorrectly. Their new accountant has just discovered the errors. The records and uncorrected errors since 2017, their first year in business, are:

Year	Net Income	Ending Inventory error Over/understated	Amount
2017	$80,000	Overstated	$7,000
2018	84,000	Overstated	9,000
2019	88,000	Understated	3,000
2020	90,000	Understated	4,000

Required

1. Prepare a worksheet that shows the correct net income for each year. Indicate each change and if it is added or deducted. Part marks are based on each correct addition or subtraction.
2. Prepare a schedule that shows the correct ending retained earnings for each year.