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P7-5 Analyzing and Interpreting the Effects of Inventory Errors LO7-5 The statements of earnings for Pruitt Company summarized for a four-year period show the following
P7-5 Analyzing and Interpreting the Effects of Inventory Errors LO7-5 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 (308) Net earnings 2021 $ 2,425 1,705 720 530 190 57 $ 133 2020 $ 2,850 1,827 1,023 553 470 141 $ 329 2019 $3,100 1,982 1,118 578 540 162 2018 $3,375 2,313 1,062 582 480 144 $ 336 $ 378 An audit revealed that in determining these amounts, the ending inventory for 2019 was understated by $30. 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 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 oss profit Operating expenses Pretax earnings Income tax expense Net earnings 2. Did the error affect the cumulative net earnings for the four-year period? O Not affected O 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
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