The records of Pelletier Inc. show the following data for the years ended July 31:

After the company's July 31, 2015, year end, the controller discovers two errors:
1. Ending inventory at the end of 2013 was actually $27,000, not $37,000. Pelletier included goods held on consignment for another company that were mistakenly included in the 2013 inventory account.
2. Pelletier purchased $5,000 of goods from a supplier on July 30, 2014, with shipping terms FOB destination.
Although it did not receive the goods until August 4, 2014, Pelletier included the goods in the July 31, 2014, year-end inventory. The purchase was then recorded properly on August 4, 2014.
Instructions
(a) For each of the three years, prepare both the incorrect and corrected income statements through to profit before income tax.
(b) What is the combined (total) impact of the errors on retained earnings (ignoring any income tax effects) for the three years before correction? After correction?
(c) Calculate both the incorrect and corrected inventory turnover ratios for each of 2015 and 2014.

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2015 2014 2013 Income statement: Sales Cost of goods sold Operating expenses $320,000 187,000 52,000 $312,000 $300,000 170,000 50,000 203,000 52,000 Statement of financial position: Merchandise inventory 37,000 24,000 37,000