Chapter 9 HWG Help Save&Exit Submit Check my work You have been hired as the new controller for the Ralston Company. Shortly after joining the company in 2018, you discover the following errors related to the 2016 and 2017 financial statements: a. Inventory at 12/31/16 was understated by $7,80o. b. Inventory at 12/31/17 was overstated by $10,800 c. On 12/31/17, inventory was purchased for $4,800. The company did not record the purchase until the inventory was paid for early in points 2018. At that time, the purchase was recorded by a debit to purchases and a credit to cash. eBock Print The company uses a periodic inventory system. Required 1. Assuming that the errors were discovered after the 2017 financial statements were issued, analyze the effect of the errors on 2017 and 2016 cost of goods sold, net income, and retained earnings. (Ognore income taxes.) 2. Prepare a journal entry to correct the errors. Required 1 Required 2 Assuming that the errors were discovered after the 2017 financial statements were issued, analyze 7 and 2016 cost of goods sold, net income, and retained earnings. (Ignore income taxes.) es 2016 2017 Ending inventory Cost of goods sold Net income Retained earnings Understated Overstated Understated Understated 7,800 Overstated 7,800 Understated $ 7,800 Overstated 7,800 Overstated 1,800 23,400 $ 15,600 6,000 Required 2> Required 1 Required 2 Prepare a journal entry to correct the errors. (If no entry is required for a transaction/event, select "No journal entry required" in first account field.) View transaction list View journal entry worksheet No Event General Journal Debit Credit Inventory 6,000 Retained earnings 6,000 Required 1