Below are three independent and unrelated accounting errors. For each error:

(1) Indicate the effect of each error on the income statement and balance sheet in the 2014 financial statements.

(2) Prepare any journal entries each company should record in 2015 to correct the errors. Ignore tax effects.

a. On December 28, 2014, Impact Imports received a $25,000 deposit from a customer for merchandise to be delivered in January 2015. Impact Imports recorded the deposit as sales revenue.

b. At the end of 2014, Munger Engineering failed to accrue interest of $8,000 on a note payable. At the beginning of 2015, when the company paid cash for interest, it was recorded as interest expense.

c. On December 31, 2014, Owen Corporation failed to accrue utilities expense of $6,800. In January 2015, when it paid the bill from the utility company, Owen made the following entry:

Utilities expense 6,800

Cash 6,800