Condensed income statements for Cozumel Company for two years are shown below.

After the end of 20×8, the company discovered that an error had resulted in an $18,000 understatement of the 20×7 ending inventory.
Compute the corrected operating income for 20×7 and 20×8. What effect will the error have on operating income and owner's equity for 20×9?

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20x8 20x7 Sales Cost of goods sold Gross margin Operating expenses $252,000 $210,000 50,000 108,000 $102,000 $102,000 60,000 S 42,000 42,000 60,000