P7-5 Analyzing and Interpreting the Effects of Inventory Errors L07-5 The statements of earnings for Pruitt Company summarized for a four-year period show the following (amounts in thousands of dollars): Sales revenue Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense (304) Net earnings 2021 $3,325 2,155 1,170 620 550 165 $ 385 2820 $3,750 2,277 1,473 643 830 249 $ 581 2019 $4,000 2,432 1,568 668 900 270 $ 630 2018 $4,275 2,763 1,512 672 840 252 $ 588 An audit revealed that in determining these amounts, the ending inventory for 2019 was understated by $48. Required: 1. Revise these statements of earnings to reflect the correct amounts. (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) PRUITT COMPANY Corrected Statement of Earnings 2021 2020 2019 2018 Sales revenue Cost of sales Gross profit Operating expenses Pretax earnings Income tax expense Net earnings 2. Did the error affect the cumulative net earnings for the four-year period? Not affected Affected 3. What effect did the error have on the income tax expense for 2019 and 2020? (Do not round Intermediate calculations. Round the final answers to the nearest dollar amount.) Income tax expense 2020 2019