The following data are from the 20X1 income statement of the Atiyeh Rug Emporium ($ in thousand); Sales $1,650 Deduct cost of Goods sold Beginning Inventory $390 Purchase 820 Cost of goods available for sale 1,210 Deduct: Ending inventory 370 Cost of goods sold 840 Gross profit 810 Other expenses 610 Income before income taxes 200 Income taxes expense at 40% 80 Net Income $120 The ending inventory was overstated by $20000 because of errors in physical count. The income tax rate was 40% in 20X1 and 20X2. 1. Which item in the income statement are incorrect and by how much? Use O for the Overstated, U for the Understated, and N for not affected. Complete the following tabulation (amounts in thousands) 20X1 20X2 Beginning Inventory N 0 $20 Ending Inventory ? ? Cost of goods sold ? ? Gross margin ? ? Income Before Income taxes ? ? Income tax expense ? ? Net Income ? ? 2. What is the dollar effect of the inventory error on retained earnings at the end of 20x1 and at the end of 20X2?