Problem 5-6A Analysis of inventory errors LO A2 Navajo Company's financial statements show the following. The company recently discovered that in making physical counts of inventory, it had made the following errors: Year 1 ending inventory is understated by $50,000, and Year 2 ending inventory is overstated by $20,000. $ $ $ For Year Ended December 31 (a) Cost of goods sold (b) Net income (c) Total current assets (d) Total equity Year 1 725,000 268,000 1,247,000 1,387,000 Year 2 955,000 275,000 1,360,000 1,580,000 Year 3 790,000 250,000 1,230,000 1,245,000 Required: 1. For each key financial statement figure(a), (b), (c), and (d) below-prepare a table to show the adjustments necessary to correct the reported amounts. 2. What is the total error in combined net income for the three-year period resulting from the inventory errors? Year 1 Year 2 Year 3 Cost of goods sold: Reported amount Adjustments for: 12/31/Year 1 error 12/31/Year 2 error Corrected amount $ O 0 Net income: Reported amount Adjustments for: 12/31/Year 1 error 12/31/Year 2 error Corrected amount 0 $ 0 $ Total current assets: Reported amount Adjustments for: 12/31/Year 1 error 12/31/Year 2 error Corrected amount $ 0 $ 0 0 Equity: Reported amount Adjustments for: 12/31/Year 1 error Equity: Reported amount Adjustments for: 12/31/Year 1 error 12/31/Year 2 error Corrected amount $ 0 $ 0 0 What is the error in total net income for the combined three-year period resulting from the inventory errors? Error in total net income of three years