Open-end questions (total 40 points) | You have been hired as the new controller for the Ralston Company. Shortly after Ontng the company in 2018, you discover the following errors related to the 2016 and 2017 financial statements: Inventory at 12/31/16 was understated by $6,200. Inventory at 12/31/17 was overstated by $9,200 On 12/31/17, inventory was purchased for $3,200. The company did not record the purchase until the inventory was paid for early in 2018. At that time, the purchase was recorded by a debit to purchases and a credit to cash. The company uses a periodic inventory system Required: 1. Assuming that the errors were discovered after the 2017 financial statements were issued, analyze the effect of the errors on 2017 and 2016 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) Fill in the following table. (12 points) 2017 2016 Amount Amount Under/overstated Under/overstated Ending inventony Cost of goods sold Net income Retained earnings Prepare a journal entry to correct the errors. (8 points) 2