Holcomb Company reported these income statement data for a 2-year period.

Holcomb Company uses a periodic inventory system. The inventories at January 1, 2013, and December 31, 2014, are correct. However, the ending inventory at December 31, 2013, is overstated by $8,000.
Instructions
(a) Prepare correct income statement data for the 2 years.
(b)What is the cumulative effect of the inventory error on total gross profit for the 2 years?
(c) Explain in a letter to the president of Holcomb Company what has happened—that is, the nature of the error and its effect on the financialstatements

2014 2013 Sales revenue Beginning inventory Cost of goods purchased Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross proft $250,000 $210,000 32,000 173,000 205,000 40,000 165,000 63,000 45,000 40,000 202,000 242,000 55,000 187,000