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R. K. Video Sales Ltd. reported the following data. The shareholders are very happy with R. K.'s steady increase in net income. (Click the
R. K. Video Sales Ltd. reported the following data. The shareholders are very happy with R. K.'s steady increase in net income. (Click the icon to view the income statements.) Auditors discovered that the ending inventory for 2018 was understated by $1 million and that the ending inventory for 2019 was also understated by $1 million. The ending inventory at December 31, 2020, was correct. Requirements 1. Show corrected income statements for each of the three years. 2. How much did these assumed corrections add to or take away from R. K.'s total net income over the three-year period? How did the corrections affect the trend of net income? 3. Will R. K.'s shareholders still be happy with the company's trend of net income? Give a reason for your answer.
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