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Reported net income was 27000 in 2012 and 35000 in 2013 the

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At the beginning of 2014, Tanham Company discovered the following errors made in the preceding 2 years:

                                                                               2012                2013

Overstatement of ending inventory                       $5,000            $2,000

Omission of wages payable                                      700                 800

Omission of allowance for doubtful accounts          1,300               1,700

Prepayment of insurance recorded as expense          500                  200

Reported net income was $27,000 in 2012 and $35,000 in 2013. The allowance for doubtful acounts had a zero balance at the beginning of 2012. No accounts were written off during 2012 or 2013. Ignore income taxes.

Required:

1. What is the correct net income for 2012 and 2013?

2. Prepare the adjusting journal entry in 2014 to correct the errors.

Reference no: EM13581512

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