The reported net income amounts for Gulf Coast Magazine, Inc., for calendar years 2012 and 2013 were $200,000 and $222,000, respectively. No annual adjusting entries were made at Calculate correct net income (L.O.5 either year-end for any of the following transactions 1. A fire insurance policy to cover a three-year period from the date of payment was purchased on March 1, 2012 for $3,600. The Prepaid Insurance account was debited at the date of purchase.

2. Subscriptions for magazines in the amount of $72,000 to cover an 18-month period from May 1, 2012, were received on April 15, 2012. The Unearned Subscription Fees account was credited when the payments were received.

3. A building costing $180,000 and having an estimated useful life of 50 years and a salvage value of $30,000 was purchased and put into service on January 1, 2012.

4. On January 12, 2013, salaries of $9,600 were paid to employees. The account debited was Salaries Expense. One-third of the amount paid was earned by employees in December of 2012.

Calculate the correct net income for 2012 and 2013. In your answer, start with the reported net income. Then show the effects of each correction (adjustment), using a plus or a minus to indicate whether reported income should be increased or decreased as a result of the correction. When the corrections are added to or deducted from the reported net income amounts, the result should be the correct net income amounts. The answer format should appear as follows:

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Explanation of Corrections Reported net income To correct error in accounting for: a. Fire insurance policy premium: Correct expense in 2012 Correct expense in 2013 2012 2013 $200,000 $222,000 -1,000 -1,200