At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2 years 2018 2019 Overstatement of ending inventory $5,000 $2,000 Omission of wages payable 700 800 Omission of allowance for doubtful accounts 1,300 1,700 Prepayment of insurance recorded as expense 500 200 Reported net income was $27,000 in 2018 and $35,000 in 2019. The allowance for doubtful accounts had a zero balance at the beginning of 2018. No accounts were written off during 2018 or 2019. Ignore income taxes. Required: 1. What is the correct net income for 2018 and 2019? 2. Prepare the adjusting journal entry in 2020 to correct the errors.