Vibrant Company had $ 850,000 of sales in each of three consecutive years 2012€“ 2014, and it purchased merchandise costing $ 500,000 in each of those years. It also maintained a $ 250,000 physical inventory from the beginning to the end of that three- year period. In accounting for inventory, it made an error at the end of year 2012 that caused its year- end 2012 inventory to appear on its statements as $ 230,000 rather than the correct $ 250,000.
1. Determine the correct amount of the company€™s gross profit in each of the years 2012 €“ 2014.
2. Prepare comparative income statements as in Exhibit 6.11 to show the effect of this error on the company€™s cost of goods sold and gross profit for each of the years 2012 €“ 2014.

*Correct amount is $ 20,000. €  Correct amount is $60,000.

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Income Statements 2012 2013 2014 $100,000 $100,000 $100,000 SalesAN Cost of goods sold Beginning inventory..$20.000 Cost of goods purchased 60,000 Goods available for sale80,000 16,000 $16,000 60,000 76,000 20,000 $20,000 60,000 80,000 20,000 ing inventory Cost of goods sold 64,0001 36,000 10,000 26,000 56,000 44,000 0,000 34,000 60,000 40.000 10,000 $ 30,000 Expenses Net income t income is $30,000 each year