The income statements for Graul Corporation for the 3 years ending in 2019 appear below.

During 2019, Graul discovered that the 2017 ending inventory had been misstated due to the following two transactions being recorded incorrectly.
a. A purchase return of inventory costing $42,000 was recorded twice.
b. A credit purchase of inventory made on December 20 for $28,500 was not recorded. The goods were shipped F.O.B. shipping point and were shipped on December 22, 2017.
Required:
1. Was ending inventory for 2017 overstated or understated? By how much?
2. Prepare correct income statements for all 3 years.
3. Did the error in 2017 affect cumulative net income for the 3-year period? Explain your response.
4. Why was the 2019 net income unaffected?

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2019 2017 2018 Sales revenue Cost of goods sold Gross margin Operating expense Income from operations Other expenses Income before taxes Income tax expense (34%) Net income $ 3,647,900 (2,006,100) $ 1,641,800 (1,152,800) $ 489,000 $ 4,643,200 (2,475,100) $ 2,168,100 (1,548,600) $ 4,287,500 (2,181,600) $ 2,105,900 (1,428,400) (123,600) (137,300) $ 482,200 (112,900) $ 376,100 (127,874) $ 553,900 (188,326) (163,948) $ 318,252 $ 365,574 $ 248,226