Waymire Company prepared the partial income statements presented below for 2019 and 2018.

During 2020, Waymire's accountant discovered that ending inventory for 2018 had been understated by $6,500.

Required:

1. Prepare corrected income statements for 2019 and 2018.

2. Prepare a schedule showing each financial statement item affected by the error and the amount of the error for that item (ignore the effect of income taxes). Indicate whether each error is an overstatement (+) or an understatement (-).

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2019 $ 538,200 2018 Sales revenue |Cost of goods sold: Beginning inventory Purchases Cost of goods available for sale Ending inventory Gross margin Operating expenses Income before taxes $ 483,700 $ 39,300 $ 32,100 292,700 $324,800 (39,300) 343,200 $382,500 (46,800) 335,700 $ 202,500 (167,200) $ 35,300 285,500 $ 198,200 (151,600) $ 46,600