PA7-5 (Algo) (Supplement 7B) Analyzing and Interpreting the Effects of Inventory Errors [LO 7-S2] Partial income statements for Sherwood Company summarized for a four-year period show the following: Net Sales Cost of Goods Sold Gross Profit 2021 $ 3,250,000 2,112,500 2018 $ 2,250,000 1,462,500 $ 787,500 2019 $ 2,650,000 1,696,000 $ 954,000 2020 $ 2,750,000 1,815,000 $ 935,000 $ 1,137,500 An audit revealed that in determining these amounts, the ending inventory for 2019 was overstated by $21,000. The inventory balance on December 31, 2020, was accurately stated. The company uses a periodic inventory system. Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error. 2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction. 2-b. Do the results lend confidence to your corrected amounts? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Restate the partial income statements to reflect the correct amounts, after fixing the inventory error. SHERWOOD COMPANY Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Restate the partial income statements to reflect the correct amounts, after fixing the inventory error. SHERWOOD COMPANY Income Statements (Corrected) Net Sales Cost of Goods Sold Gross Profit 2018 2019 2020 2021 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Compute the gross profit percentage for each year (a) before the correction and (b) after the correction. (Round your a to the nearest whole percent.) Before Correction After Correction 2018 2019 2020 2021 % % % % % % % % Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error. 2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction. 2-b. Do the results lend confidence to your corrected amounts? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Do the results lend confidence to your corrected amounts? OYes ONO