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

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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 2018 $ 2,550,000 1.504,500 $ 1,045,500 2019 $ 2,950,000 1,711,000 $ 1,239,000 2020 $ 3,050,000 1,830,000 $ 1,220,000 2021 $ 3,550,000 2,094,500 $ 1,455,500 An audit revealed that in determining these amounts, the ending inventory for 2019 was overstated by $22,200. The inventory balance on December 31, 2020, 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. Do the results lend confidence to your corrected amounts? SHERWOOD COMPANY Income Statements (Corrected) 2018 2019 2020 2021 Net Sales Cost of Goods Sold Gross Profit 2020 2021 2018 2019 % % % % Before Correction After Correction : % % % % Do the results lend confidence to your corrected amounts? Yes No

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