Condensed income statements for Hamlin Company for two years are shown below.

After the end of \(20 \times 2\) it was discovered that an error had resulted in a 9,000 understatement of the \(20 \times 1\) ending inventory.

Calculate the corrected net profit for \(20 \times 1\) and \(20 \times 2\). What effect will the error have on net profit and shareholders' equity for \(20 \times 3\) ?

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20x2 20x1 Sales 126,000 105,000 Cost of Goods Sold 75,000 54,000 Gross Profit 51,000 51,000 Operating Expenses 30,000 30,000 Net Profit 21,000 21,000