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Peaceful Carpets books show the following data. (Click the icon to view the income statements.) In early 2026, auditors found that the ending merchandise inventory

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Peaceful Carpets books show the following data. (Click the icon to view the income statements.) In early 2026, auditors found that the ending merchandise inventory for 2023 was understated by $7,000 and that the ending merchandise inventory for 2025 was overstated by $8,000. The ending merchandise Inventory at December 31, 2024, was correct Read the requirements Requirements 1. Prepare corrected income statements for the three years. 2. State whether each year's net incomebefore your correctionsis understated or overstated, and indicate the amount of the understatement or overstatement. 3. Compute the inventory turnover and days' sales in inventory using the corrected income statement for the three years. (Round all numbers to two decimals.) Print Done Peaceful Carpets Income Statement For the Years Efded December 31, 2025, 2024, and 2023 2025 2024 Ending Merchandise Inventory Overstated by $8,000 Correct 2023 Ending Merchandise Inventory Understated by $7,000 Net Sales Revenue Cost of Goods Sold Beginning Merchandise Inventory Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale Less: Ending Merchandise Inventory Cost of Goods Sold Gross Profit Operating Expenses Net Income Requirement 2. State whether each year's net income before your corrections- understated or overstated, and indicate the amount of the understatement or overstatement Year Prior to correction not income was 2025 2024 2023 Requirement 3. Compute the inventory tumover and days sales in inventory using the corrected income statement for the three years. (Round all numbers to two decimals.) Select the labels and enter the amounts to computo inventory turnover for each year. (Round your answers to two decimal places. XXX) Inventory turnover times 2025 2024 times 2023 times Now select the labels and enter the amounts to compute days' sales in inventory for each year. (Enter all amounts to two decimal places, XXX) Days'sales in in inventory 2025 days 2024 days 2023 days Data Table 2025 2024 2023 $ 204,000 Net Sales Revenue $ 166,000 $ 181,000 Cost of Goods Sold: $ 38,000 17,000 133,000 $ 21,000 98.000 85,000 Beginning Merchandise Inventory Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale 150,000 119,000 17.000 123,000 21.000 26,000 Less: Ending Merchandise Inventory 10 43 RO Print Done Less: Ending Merchandise Inventory 26,000 17.000 21,000 Cost of Goods Sold 124,000 102,000 102,000 Gross Profit 80,000 54,000 64,000 35,000 Operating Expenses 79,000 42,000 $ Net Income 26,000 $ 29,000 37,000 Rrint Dona

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