Plush River 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 $6,000 and that the ending merchandise inventory for 2025 was overstated by $7,000. The ending merchandise inventory at December 31, 2024, was correct. Read the requirements. Ending Merchandise Inventory Overstated by $7,000 Ending Merchandise Inventory Understated by $6,000 Correct 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 1. Prepare corrected income statements for the three years. 2. State whether each year's net income-before your corrections-is 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.) 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 2025 $ 26,000 135,000 161,000 35,000 $ 211,000 126,000 85,000 61,000 24,000 2024 $ 31,000 103,000 134,000 26,000 $ 168,000 $ 108,000 60,000 32,000 28,000 2023 46,000 90,000 136,000 31,000 179,000 105,000 74,000 34,000 40,000