You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2018, you discover the following errors related to the 2016 and 2017 financial statements a. Inventory at 12/31/16 was understated by $6700 b. Inventory at 12/31/17 was overstated by $9,700 con 12/31/17, inventory was purchased for $3.700. The company did not record the purchase until the inventory was paid for early in 2018. At that time, the purchase was recorded by a debit to purchases and a credit to cash. The company uses a periodic inventory system. Required: 1. Assuming that the errors were discovered after the 2017 financial statements were issued, analyze the effect of the errors on 2017 and 2016 cost of goods sold, net income, and retained earnings. Ognore income taxes.) 2. Prepare a journal entry to correct the errors. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assuming that the errors were discovered after the 2017 financial statements were issued analyze the effect of the errors on 2017 and 2016 cost of goods sold, net income, and retained earnings (Ignore income taxes.) 2016 Ending inventory Understand 3 0 .700 Oversted 0.700 Cost of goods sold Overstand 3 8.700 Understand 3 .700 Netingome understate 3 6 .700 Over 3 .700 Understated Required 2 > 9 e here to search D e 5