ABC Inc. showed income before taxes for 2023 of $201,000; for 2022, it was $124,000. However, SGI Chartered Accountants (SGI) reported the following errors had been made:

The internal accountant recorded interest expense for both 2022 and 2023 on loans payable, made the following entry each year:

Interest Expense 30,000 Cash

30,000

The bonds have a face value of $350,000 and pay a stated interest rate of 7.5%. They were issued at a discount of $30,000 on January 1, 2022, to yield an effective interest rate of 8%. (Use the effective interest method.)

prepare a schedule showing the calculation of corrected income before tax for 2022 and 2023. Once this is completed, your next step is to prepare the journal entries for 2023. You can assume the books are still open and you can ignore income tax effects