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 S7,000 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. - X Requirements Requirement 1. Prepare corrected income statements for the three years. 1. Prepare corrected income statements for the three years. 2. State whether each year's net income-before your correctionsis understated or overstated, and indicate the amount of the understatement or overstatement 3. Compute the inventory turnover and days' sales in inventory using the corrected income statement for the three years. (Round all numbers to two decimals.) Waterlily Carpets Income Statement For the Years Ended December 31, 2025, 2024, and 2023 2025 2024 Ending Merchandise Inventory Overstated by $8,000 Correct 2023 Ending Merchandise Inventory Understated by $7,000 Data table Net Sales Revenue 2025 2024 2023 Net Sales Revenue $ 214,000 $ 167,000 $ 176,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 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 $ 20,000 140.000 $ 27,000 96,000 47,000 84,000 Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale 160,000 28,000 123,000 20,000 131,000 27,000 Less: Ending Merchandise Inventory Cost of Goods Sold 132,000 103,000 104,000 Operating Expenses Gross Profit Net Income 82,000 54.000 64,000 35,000 72,000 38,000 Operating Expenses $ 28,000 S 29,000 $ 34,000 Net Income 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 S7,000 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. - X Requirements Requirement 1. Prepare corrected income statements for the three years. 1. Prepare corrected income statements for the three years. 2. State whether each year's net income-before your correctionsis understated or overstated, and indicate the amount of the understatement or overstatement 3. Compute the inventory turnover and days' sales in inventory using the corrected income statement for the three years. (Round all numbers to two decimals.) Waterlily Carpets Income Statement For the Years Ended December 31, 2025, 2024, and 2023 2025 2024 Ending Merchandise Inventory Overstated by $8,000 Correct 2023 Ending Merchandise Inventory Understated by $7,000 Data table Net Sales Revenue 2025 2024 2023 Net Sales Revenue $ 214,000 $ 167,000 $ 176,000 Cost of Goods Sold: Beginning Merchandise Inventory $ 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 $ 20,000 140.000 $ 27,000 96,000 47,000 84,000 Plus: Net Cost of Inventory Purchased Cost of Goods Available for Sale 160,000 28,000 123,000 20,000 131,000 27,000 Less: Ending Merchandise Inventory Cost of Goods Sold 132,000 103,000 104,000 Operating Expenses Gross Profit Net Income 82,000 54.000 64,000 35,000 72,000 38,000 Operating Expenses $ 28,000 S 29,000 $ 34,000 Net Income
