Answer Happy

First Quarter Second Quarter Sales Revenue Cost of Goods Sold $ 18,000 $ 21,600 $ 3,600 Beginning Inventory Purchases $ 4,600 7,600 12,600 Goods Available for Sale 11,200 17,200 Ending Inventory 4,600 9,600 Cost of Goods Sold Gross Profit 6,600 11,400 5,600 7,600 14,000 6,600 Operating Expenses Income from Operations $ 5,800 $ 7,400 During the third quarter, the company's internal auditors discovered that the ending inventory for the first quarter should have been $5,200. The ending inventory for the second quarter was correct. Required: 1. What effect would the error have on total Income from Operations for the two quarters combined? 2. What effect would the error have on Income from Operations for each of the two quarters? 3. Prepare corrected income statements for each quarter. Ignore income taxes.