Condensed income statements for Cozumel Company for two years are shown below.
Cost of goods sold$252,000
Income before income taxes
After the end of 20×7, the company discovered that an error had resulted in an $18,000 understatement of the 20×6 ending inventory. Compute the corrected income before income taxes for 20×6 and 20×7.
What effect will the error have on income before income taxes and stockholders’ equity for 20×8?