Exercise 22-9 Presented below are the comparative income and retained earnings statements for Waterway Inc. for the years 2017 and 2018. Sales Cost of sales Gross profit Expenses 2018 $332,000 192,000 140,000 92,200 2017 $280,000 140,000 140,000 54,000 $86,000 $72,900 86,000 (23,300 ) $135,600 Net income $47,800 Retained earnings (Jan. 1) Net income Dividends Retained earnings (Dec. 31) $135,600 47,800 (28,300 ) $155,100 The following additional information is provided: 1. In 2018, Waterway Inc. decided to switch its depreciation method from sum-of-the-years' digits to the straight-line method. The assets were purchased at the beginning of 2017 for $93,500 with an estimated useful life of 4 years and no salvage value. (The 2018 income statement contains depreciation expense of $28,050 on the assets purchased at the beginning of 2017.) 2. In 2018, the company discovered that the ending inventory for 2017 was overstated by $26,200; ending inventory for 2018 is correctly stated. Prepare the revised retained earnings statement for 2017 and 2018, assuming comparative statements. (Ignore income taxes.)