22-7 renn Company is in the process of adjusting and correcting its books at the end of 20x2. In reviewing its records, the following information is compiled. 1. Penn has failed to accrue sales commissions payable at the end of each of the last 2 years, as follows. December 31, 20x1 ......................$3.500 December 31, 20x2 ...........................$2,500 2. In reviewing the December 31, 2011. Inventory. Penn discovered errors in its Inventory taking procedures that have caused inventories for the last 3 years to be incorrect, as follows. December 31, 20x0 Understated $16,000 December 31, 20x1 Understated $19,000 December 31, 20x2 Overstated S6,700 Penn has already made an entry that established the incorrect December 31, 20x2, inventory amount At December 31, 20x2, Penn decided to change the depreciation method on its office equipment from double-declining balance to straight-line. The equipment had an original cost of $100,000 when purchased on January 1, 20x0. It has a 10- year useful life and no salvage value. Depreciation expense recorded prior to 20x2 under the double declining balance method was 536,000. Penn has already recorded 20x2 depreciation expense of $12.800 using the double-declining balance method. Before 20x2, Penn accounted for its income from long-term construction contracts on the completed-contract basis. Early in 20x2, Penn changed to the percentage of-completion basis for accounting purposes. It continues to use the completed- contract method for tax purposes. Income for 20x2 has been recorded using the percentage-of-completion method. The following information is available. Pretax Income Percentage-of- Completed Completion Contract Prior to 20x2 $150,000 $105,000 20x2 60,000 20,000 Instructions Prepare the journal entries necessary at December 31, 20x2, to record the above corrections and changes. The books are still open for 20x2. The income tax rate is 40%. Penn has not yet recorded its 20x2 income tax expense and payable amounts so current-year tax effects may be ignored. Prior-year tax effects must be considered in item