The reported net incomes for the first 2 years of Pronghorn Products, Inc., were

Question

The reported net incomes for the first 2 years of Pronghorn Products, Inc., were as follows: 2017, $134,800; 2018, $172,600. Early in 2019, the following errors were discovered 1. Depreciation of equipment for 2017 was overstated $17,600. 2. Depreciation of equipment for 2018 was understated $38,000. 3. December 31, 2017, inventory was understated $47,700. 4. December 31, 2018, inventory was overstated $15,800 Prepare the correcting entry necessary when these errors are discovered. Assume that the books are closed. (Ignore income tax considerations.) (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select '"No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit

Explanation / Answer

Retained earnings 36200         Inventory 15800        Accumulated depreciation 20400 =38000-17600

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