The accounting records of Oriental Rugs show these data (in thousands).

As the auditor, you discovered that the ending inventory for 2018 was overstated by \(\$ 100,000\) and that the ending inventory for 2019 was understated by \(\$ 50,000\). The ending inventory at December 31, 2020, was correct.

{Requirements}
1. Show correct income statements for each of the three years.
2. How much did these corrections add to, or take away from, Oriental Rugs's total net income over the three-year period? How did the corrections affect the trend of net income?
3. Will Oriental Rugs's shareholders still be happy with the company's trend of net income? Give a reason for your answer.

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A Oriental Rugs Income Statements for the Years Ended B C D E F G H 2 (Amounts in thousands) 2020 2019 2018 3 Net sales revenue $ 1,400 $ 1,200 $1,100 4 Cost of goods sold: 5 Beginning inventory $ 400 $ 300 $ 200 6 Purchases 800 700 600 7 Goods available for sale 1,200 1,000 800 8 Less ending inventory (500) (400) (300) 9 Cost of goods sold 700 600 500 10 Gross profit 700 600 600 11 Total operating expenses 500 430 450 12 Net income $ 200 $ 170 $ 150 13