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

After the company's July 31, 2012, year end, the controller discovers two errors:
1. Ending inventory at the end of 2010 was actually $27,000, not $37,000. Pelletier included goods held on consignment for another company that were mistakenly included in the 2010 inventory account.
2. A purchase of merchandise on account for $5,000 was recorded as a purchase in August 2011 (fiscal 2012) and included in the $37,000 2012 Ending inventory balance. It should have been recorded as a purchase in July 2011 (fiscal 2011) and included in the 2011 inventory. The Ending inventory of $37,000 was correct at the end of July 2012.
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 2012 and 2011.

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2012 2011 2010 Income statement: Sales Cost of goods sold Operating expenses $320,000 S312,000 $300,000 170,000 50,000 187,000 52,000 203,000 52,000 Statement of financial position: Merchandise inventory 37,000 24,000 37,000