Dalez Corporation prepared the following two statements of earnings (simplified for illustrative purposes):

During the third quarter, it was discovered that the ending inventory for the first quarter should have been $ 4,200.
Required:
1. What effect did this error have on the pretax earnings of each quarter and of the two quarters combined? Explain.
2. Did this error affect the earnings per share amounts for each quarter? (See the discussion of earnings per share in Chapter 6.) Explain.
3. Prepare corrected statements of earnings for each quarter.
4. Set up a schedule with the following headings to reflect the comparative effects of the correct and incorrect amounts on the statement of earnings:

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First Quarter 2014 Second Quarter 2014 Sales revenue Cost of sales $11,000 $18,000 $ 3,800 13,000 16,800 9,000 Beginning inventory Purchases $4.000 3,000 7,000 3,800 Cost of goods available for sale Ending inventory Cost of sales 3,200 7,800 5,000 2,800 7,800 10,200 6,000 $ 4,200 Gross proft Expenses (operaing) Pretax eamings 1st Quarter Statement of earnings item Incorrect oect Error Incorrect Correct Error 2nd Quarter Amount Amount (if any) Amunt Amnt (if any)