The accounting records of Oriental Rugs show these data (in thousands). As the auditor, you discovered that the ending inventory for 2012 was overstated by $100,000 and that the ending inventory for 2013 was understated by $50,000. The ending inventory at December 31, 2014, was correct.

Requirements
1. Show correct income statements for each of the three years.
2. How much did these corrections add to, or take away from, Oriental Rugs' total net income over the three-year period? How did the corrections affect the trend of net income?

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Oriental Rugs Income Statements for the Years Ended (Amounts in thousands) Net sales revenue Cost of goods sold: 2014 2013 2012 $1,400 $1,200 $1,100 $ 300 700 1,000 (400) $ 400 800 Beginning inventory Purchases Goods available for sale Less ending inventory Cost of goods sold $200 600 800 (300) 700 700 500 $ 200 600 600 430 $ 170 500 600 450 $ 150 Gross profit Total operating expenses. Net income