(Solved): help please P7-5 Analyzing and Interpreting the Effects of Inventory Errors LO7-5 The statements of ...

P7-5 Analyzing and Interpreting the Effects of Inventory Errors LO7-5 The statements of earnings for Pruitt Company summarized for a four-year perlod show the following (amounts in thousands of dollars): An audit revealed that in determining these amounts, the ending inventory for 2019 was understated by \( \$ 38 \). Required: 1. Revise these statements of earnings to reflect the correct amounts. (Do not round intermediate calculations. Raund the final answers to the nearest dollar amount.) 2. Did the error affect the cumulative net earnings for the four-year period? Not affected Affected 3. What effect did the error have on the income tax expense for 2019 and 2020? (Do not round intermediate calculations. Round the final answers to the nearest dollar amount.) P7-6 Reporting the Statement of Earnings and Cash Flow Effects of Lower of Cost and Net Realizable Value LO7-5 Smart Company prepared its annual financial statements dated December 31,2020 . The company applies the FiFO inventory costing method; however, the company neglected to apply the LC\&NRV valuation to the ending inventory. The preliminary 2020 statement of earnings follows: Assume that you have been asked to restate the 2020 financial statements to incorporate the LC\& NRV inventory valuation rule. You have developed the following data relating to the ending inventory at December 31,2020 : Required: 1. Restate the statement of earnings to reflect the valuation of the ending inventory on December 31,2020 , at the LC\&NRV. Apply the LC\&NRV rule on an item-by-item basis. 2. Compare and explain the LC\&NRV effect on each amount that was changed in part 1. (Negative answers should be indicated by a minus sign.)