Goods Grocery reported the following comparative income statements for the Merchandis E6-24 Correctin rs ended June 30, 2019 and 2018: Learning Ob 1.2019, NI S NATURE FOODS GROCERY Income Statements Years Ended June 30, 2019 and 2018 2019 2018 Net Sales Revenue Cost of Goods Sold: $ 134,000 119,000 inning Merchandise Inventory $ 17,000 Net Cost of Purchases Cost of Goods Available for Sale Less: Ending Merchandise Inventory 18,000 Cost of Goods Sold $14,000 67,000 81,000 17,000 78,000 95,000 Gross Profit Operating Expenses Net Income 77,000 57,000 26,000 31,000 64,000 55,000 21,000 S 34,000 During 2019, Nature Foods Grocery discovered that ending 2018 merchandise inven- tory was overstated by $5,500. Requirements
1. Prepare corrected income statements for the two years
2. State whether each year's net income-before your corrections-is understated or overstated, and indicate the amount of the understatement or overstatement. inventory