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Partial income statements for Sherwood Company summarized for a four-year period show the following: Net...

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Accounting

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Partial income statements for Sherwood Company summarized for a four-year period show the following: Net Sales Cost of Goods Sold Gross Profit 20152016 20172018 $1,200,000 $1,600, 000 $1,700,000 $2,200,000 936,000 1,232,000 1,343,000 1,716,000 $ 264,000 368,000 357,000 484,000 An audit revealed that in determining these amounts, the ending inventory for 2016 was overstated by $12,000. The inventory balance on December 31, 2017, was accurately stated. The company uses a periodic inventory system Required: 1. Restate the partial income statements to reflect the correct amounts, after fixing the inventory error 2-a. Compute the gross profit percentage for each year (a) before the correction and (b) after the correction. 2-b. Does the pattern of gross profit percentages lend confidence to your corrected amounts

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