San Marcos Electronics failed to record the following items at December 31, 19X4, the end of its fiscal year:
- Accrued salary expense, \(\$ 1,100\)
- Prepaid insurance, \(\$ 700\)
- Accrued interest expense, \(\$ 600\)
- Depreciation expense, \(\$ 400\)
Instead of recording the accrued expenses at December 31, 19X4, San Marcos recorded the expenses when it paid them in 19X5. The company recorded the insurance as expense when it was prepaid for one year, late in 19X4. Depreciation expense for 19X5 was correctly recorded.
San Marcos incorrectly reported net income of \(\$ 10,000\) in 19X4 and \(\$ 7,400\) in 19X5 because of the above errors.
\section*{Required}
Compute San Marcos's correct net income for 19X4 and 19X5. Compare the trend in net income, as corrected, with the reported trend.