AA ezto.mheducation.com Saved ch Help Save & Exit Submit Company A acquired a machine from Company B. Company B completed construction of the machine on January 1, Year 1. In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 10%. Company B made a conceptual error In preparing the amortization schedule, which Company A failed to discover until Year 3. As a result of the error, Company A understated interest expense by $63,000 in Year 1 and $58,000 in Year 2. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. 3. Will Company A account for the error (a) retrospectively or (b) prospectively? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Indicate in the table below which accounts are incorrect as a result of these errors at January 1, Year 3 and whether those accounts are understated or overstated. (Ignore income taxes.) Account Year 1 Year 2 < Prev 19 of 20 Next >