192  AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows:                                                                                    2026                                                                                                      2025   Ending inventory                                         $12,000 overstated                   $25,000 overstated   What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much? Cost of goods sold Income before taxes Retained earnings   What will be the impact on the 2026 financial statements? Will these items be overstated or understated as compared to actual results? By how much? Cost of goods sold Income before taxes Retained earnings What will happen when AM Beauty ultimately corrects its physical inventory count?

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