Please do not give solution in image format thanku E7-15 (Static) Analyzing and Interpreting the Impact of an Inventory Error LO7-5Grants Corporation prepared the following two income statements (simplified for illustrative purposes):Second QuarterSales revenueCost of goods soldBeginning inventoryPurchasesGoods available for saleEnding inventoryCost of goods soldGross profitFirst Quarter$ 4,0003,0007,0003,800$ 11,0003,2007,8005,000$ 2,800$ 3,80013,00016,8009,000$ 18,0007,80010,2006,000$ 4,200ExpensesPretax incomeDuring the third quarter, it was discovered that the ending inventory for the first quarter should have been $4,400.Required:What effect did this error have on the combined pretax income of the two quarters?>Which quarter's or quarters' (if any) EPS amounts were affected by this error?Prepare corrected income statements for each quarter.Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement Required 1and 21. What effect did this error have on the combined pretax income of th2. Which quarter's or quarters' (if any) EPS amounts were affected by1. Effect on combined pretax income2. Quarter(s)Required 1and 2Prepare corrected income statements for each quarter.Cost of goods sold:Required 1and 2Required 3Goods available for saleCost of goods soldRequired 3Required 3 Required 4Beginning inventoryEnding inventoryCost of goods soldGross profitPretax incomeIncorrectRequired 4Required 4Correct$ 4,000 $ 4,000First QuarterFirst Quarter0< Required 1 and 2Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement.Second QuarterErrorRequired 1 and 2< Required 3IncorrectSecond Quarter9,000Correct0Required 4 >9,000Required 4 >Error

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What effect did this error have on the combined pretax income of the two quarters?> Which quarter's or quarters' (if any) EPS amounts were affected by this error? Prepare corrected income statements for each quarter.

What effect did this error have on the combined pretax income of the two quarters?> Which quarter's or quarters' (if any) EPS amounts were affected by this error? Prepare corrected income statements for each quarter.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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