A & R Industrial Supply shows the following financial statement data for 2012, 2013, and 2014. Prior to issuing the 2014 statements, auditors found that the ending inventory for 2012 was understated by $8,000 and that the ending inventory for 2014 was overstated by $9,000. The ending inventory at December 31, 2013, was correct.

Requirements
1. State whether each year€™s net income before corrections is understated or overstated and indicate the amount of the understatement or overstatement.
2. Prepare corrected income statements for the three years.
3. What is the impact on the 2014 income statement if the 2012 inventory error is left uncorrected?

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2014 2013 2012 (In thousands) Sales Revenue $210 $191 $186 Cost onlning Invenory 143 Beginning Inventory 12 Net Purchases Cost of Goods Available155 Ending Inventory Cost of Goods Sold $ 18 121 139 12 $15 128 143 18 16 Gross Profit Operating Expenses Net Income 139 71 46 25 127 64 43 21 125 61 42 $ 19