Waterlily Carpets' books show the following data. (Click the icon to view the income statements.) In early 2026, auditors found that the ending merchandise inventory for 2023 was understated by $7,000 and that the ending merchandise inventory for 2025 was overstated by $8,000. The ending merchandise inventory at December 31, 2024, was correct. Read the requirements. Requirement 1. Prepare corrected income statements for the three years. Waterlily Carpets Income Statement For the Years Ended December 31, 2025, 2024, and 2023 Net Sales Revenue Cost of Goods Sold Beginning Merchandise Inventory Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale Less: Ending Merchandise Inventory Cost of Goods Sold Gross Profit Operating Expenses Net Income Data table Net Sales Revenue h 2025 $ 214,000 2024 $ 162,000 2023 $ 170,000 2025 2024 2023 Cost of Goods Sold: Ending Merchandise Inventory Overstated by $8,000 Ending Merchandise Inventory Understated Beginning Merchandise Inventory $ 23,000 $ 26,000 $ 39,000 137,000 103,000 88,000 Correct by $7,000 Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale 160,000 129,000 127,000 35,000 23,000 26,000 Less: Ending Merchandise Inventory 125,000 106,000 101,000 Cost of Goods Sold Gross Profit 89,000 56,000 69,000 65,000 29,000 29,000 Operating Expenses $ 24,000 S 27,000 $ 40,000 Net Income Print Done