Question

The income statement for Pruitt Company summarized for a four-year period shows the following 2018 2016 2017 2019 2,026,000 2,469.000 2,714,000 2,976,000 Sales revenue 1,494,000 1,625,000 779,000 2100,000 Cost of goods sold 935,000 876,000 Gross profit 532,000 844,000 474,000 522,000 507.000 525,000 Expenses 58,000 337000 351,000 413,000 Pretax income 122,850 20,300 117,950 144,550 Income tax expense (35%) 37700 219.050 219,050 228.150 Net income An audit revealed that in determining these amounts, the ending inventory for 2017 was overstated by $26,000. The company uses a periodic inventory system.