Required information [The following information applies to the questions displayed below.] The income statement for Pruitt Company summarized for a four-year period shows the following: Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income 2016 $ 2,035,000 1,503,000 532,000 489,000 43,000 12,900 $ 30,100 2017 $2,451,000 1,621,000 830,000 500,000 330,000 99,000 $ 231,000 2018 $2,708,000 1,763,000 945,000 532,000 413,000 123,900 $ 289,100 2019 $ 2,979,000 2,099,000 880,000 525,000 355,000 106,500 $ 248,500 An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $29,000. The company uses a periodic inventory system. Required: 1. Prepare the income statements to reflect the correct amounts, taking into consideration the inventory error. PRUITT COMPANY Income Statement For the Four-Year Period 2016 2017 2018 2019 Sales revenue Cost of goods sold Gross profit Expenses Pretax income Income tax expense (30%) Net income 2. Compute the gross profit percentage for each year before the correction and after the correction. (Round your answers to the nearest whole percent.) 2016 % 2017 % 2018 % 2019 % Before correction After correction After correction % % % % | % 3. What effect would the error have had on the income tax expense assuming a 30 percent average rate? Income Tax Expense 2017 2018