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Grants Corporation prepared the following two income statements (simplified for illustrative purposes):

	First Quarter						Second Quarter
Sales revenue			$	11,100							$	19,100
Cost of goods sold
Beginning inventory	$ 4,200						$	3,100
Purchases	2,800							12,400
Goods available for sale	7,000							15,500
Ending inventory	3,100							9,600
Cost of goods sold				3,900								5,900
Gross profit				7,200								13,200
Expenses				4,400								6,000
Pretax income			$	2,800							$	7,200

During the third quarter, it was discovered that the ending inventory for the first quarter should have been $3,560.

Required:

1. What effect did this error have on the combined pretax income of the two quarters?

2. Which quarter's or quarters' (if any) EPS amounts were affected by this error?

3. Prepare corrected income statements for each quarter.

4. Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement.

please also show how you got the answers, thank you

Prepare corrected income statements for each quarter. First Quarter Second Quarter Sales revenue $ 11,100 $ 19,100 Cost of goods sold: Beginning inventory Purchases $ $ 3,560 4,200 2,800 12,400 Goods available for sale 15,960 7,000 3,560 Ending inventory 9,600 3,440 6,360 Cost of goods sold Gross profit Expenses Pretax income Req 1 and 2 Req3 Req 4 Prepare the schedule to reflect the comparative effects of the correct and incorrect amounts on the income statement. 1st Quarter 2nd Quarter Incorrect Correct Error Incorrect Correct Error $ 4,200 $ 4,200 No error 9,600 9,600 No error Beginning inventory Ending inventory Cost of goods sold Gross profit Pretax income

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