Lally Industries shows the following financial statement data for 2013, 2014, and 2015.

Prior to issuing the 2015 statements, auditors found that the ending inventory for 2013 was understated by $5,000 and that the ending inventory for 2015 was overstated by $12,000. The ending inventory at December 31, 2014, 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 2015 income statement if the 2013 inventory error is left uncorrected?

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(In thousands) 2015 2014 2013 $175 Net Sales Revenue $205 $170 Cost of Goods Sold: $ 12 $ 27 Beginning Inventory $ 24 Net Purchases 138 103 126 Cost of Goods Available 150 130 150 Ending Inventory 21 12 27 Cost of Goods Sold 129 118 123 Gross Profit 76 52 52 Operating Expenses 47 31 36 $ 29 S 21 $ 16 Net Income