E. Example Problem Ending Inventory Overstated You have been hired to assist the "I Need Help" (INH) Company with their year-end inventory for 20X6. The Company's year-end is 12-31-20X6. Upon review of the financial statements you determine that the ending inventory for 20X5 was $20,000 but the company incorrectly reported the amount as $35,000. The 12-31-20X6 ending inventory is correct. The company has reported net income of $60,000 for 20X5 and $55,000 for 20X6. The 20X5 error was never corrected. REQUIRED: 1. Compute the correct net income figures for 20X5 and 20X6. Show all work clearly. 2. Over the two year period, in total, would Retained Earnings be incorrect? Explain. 1. Net Income As Reported Effect of Ending Inventory Error from 20X5 Effect of Beginning Inventory Error from 20X6 Net Income as corrected 20X5 $60,000 20X6 $55,000 Total $115,000 2. Assume the year 20X5 error was not corrected, would Retained Earnings be incorrect at the end of 20X6? Explain