Mitchum Company uses a periodic system and has a December 31 year-end. Outlined below are three independent situations: Situation No. 1 Purchases and sales were properly recorded during 2016 but inventory in the amount of $27,000 was understated on December 31, 2016. Situation No. 2 An invoice in the amount of $107.000 for inventory received in December 2016 was not entered on the books in 2016. The invoice was recorded as a purchase in January 2017 when the invoice was paid. The goods were counted in the 2016 inventory count and included in ending inventory on the 2016 financial statements. Situation No. 3 Goods amounting to $89,000 were received on consignment at the end of 2017 and were included in the physical count of goods on hand and were also included in ending inventory on the 2017 financial statements. Required: For each of the three situations above, complete the table below to indicate the effect of the error (overstated, understated, or no effect) and the amount involved on: (b) (c) the company's 2016 net income; the company's 2017 net income; and the company's 2017 ending retained earnings