Pond Rush Carpets's books show the following data:

In early 2020, auditors found that the ending merchandise inventory for 2017 was understated by $8000 and that the ending merchandise inventory for 2019 was overstated by $9000. The ending merchandise inventory at December 31, 2018 was correct.

Requirement 1: Prepare corrected income statements for the three years.

Requirement 2: State whether each year's net income - before your corrections - is understated or overstated and indicate the amount of the understatement of overstatement.

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Requirement 3:

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2019 $ 202,000 2018 $ 2017 $ 163,000 170,000 Net Sales Revenue Cost of Goods Sold: Beginning Merchandise Inventory Net Cost of Purchases $ 21,000 $ 25,000 90,000 35,000 80,000 139,000 Cost of Goods Available for Sale 115,000 160,000 29,000 115,000 25,000 21,000 Less: Ending Merchandise Inventory 131,000 94,000 90,000 Cost of Goods Sold Gross Profit Operating Expenses 71,000 42,000 69,000 45,000 80,000 46,000 $ 29,000 $ 24,000 $ 34,000 Net Income Pond Rush Carpets Income Statement For the Years Ended December 31, 2019, 2018, and 2017 2019 2018 2017 Ending Merchandise Inventory Overstated by $9,000 Ending Merchandise Inventory Understated by $8,000 Correct Net Sales Revenue Cost of Goods Sold: Beginning Merchandise Inventory Net Cost of Purchases 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 correctionsis understated or overstated, and indicate the amount of the understatement or overstatement. Year: Prior to correction net income was 2019 2018 2017 correct overstated by understated by Requirement 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.) Select the labels and enter the amounts to compute inventory turnover for each year. (Round your answers to two decimal places, X.XX.) = 2019 Inventory turnover times times times 2018 2017 365 days Average Merchandise Inventory Beginning Merchandise Inventory Cost of goods available for sale Cost of Goods Sold Ending Merchandise Inventory Gross profit Inventory turnover Net income Operating expenses Purchases Now select the labels and enter the amounts to compute days' sales in inventory for each year. (Enter all amounts to two decimal places, X.XX.) = Days' sales in inventory days 2019 2018 days 2017 days 365 days Average Merchandise Inventory Beginning Merchandise Inventory Cost of goods available for sale Cost of Goods Sold Ending Merchandise Inventory Gross profit Inventory turnover Net income Operating expenses Purchases