Partial income statements for Sherwood Company summarized for a four-year period show the following: ...
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Partial income statements for Sherwood Company summarized for a four-year period show the following: 
An audit revealed that in determining these amounts, the ending inventory for 2019 was overstated by $24,000. The inventory balance on December 31, 2020, was accurately stated. The company uses a periodic inventory system. 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?
\begin{tabular}{lrrrrr} Net Sales & 2018 & 2019 & 2020 & $2021 & $2,000,000 \\ Cost of Goods Sold & $3,000,000 & $3,400,000 & $3,500,000 & $2,785,000 & 2,000,000 \\ Gross Profit & 1,500,000 & 1,666,000 & 1,000,000 \\ \hline \end{tabular}
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