(Round all computations to two decimal places.)

E22-9 (LO2,3) (Change in Estimate and Error; Financial Statements) Presented below are the comparative income and retained earnings statements for Denise Habbe Inc. for the years 2017 and 2018.

	00201800	00201700
Sales	$340,000	$270,000
Cost of sales	200,000	142,000
Gross profit	140,000	128,000
Expenses	88,000	50,000
Net income	$52,000	$78,000
Retained earnings (Jan. 1)	$125,000	$72,000
Net income	52,000	78,000
Dividends	(30,000)	(25,000)
Retained earnings (Dec. 31)	$147,000	$125,000

The following additional information is provided:

1. In 2018, Denise Habbe 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 $100,000 with an estimated useful life of 4 years and no salvage value. (The 2018 income statement contains depreciation expense of $30,000 on the assets purchased at the beginning of 2017.)

2. In 2018, the company discovered that the ending inventory for 2017 was overstated by $24,000; ending inventory for 2018 is correctly stated.

Required:

Using Excel:

1. Prepare restated Income Statements for 2017 and 2018.

2. Prepare restated Statement of Retained Earnings for 2017 and 2018