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

Sprague Company uses a periodic inventory system. The inventories at January 1, 2011, and December 31, 2012, are correct. However, the ending inventory at December 31, 2011, 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 Sprague Company what has happened??that is, the nature of the error and its effect on the financialstatements.

2012 2011 Sales revenue $250,000 $210,000 Beginning inventory Cost of goods purchased 40,000 202,000 32,000 173,000 Cost of goods available for sale Less: Ending inventory 242,000 205,000 40,000 55,000 Cost of goods sold 187,000 165,000 $ 63,000 $ 45,000 Gross profit