Below are three independent and unrelated errors. 1. On December 31, 20x6, Reyes Ltd. failed to accrue office supplies expense of $1,800. In January 20x7, when it received the bill from its supplier, Reyes made the following entry: 2,400 Office supplies expense Cash 2.400 2. On the last day of 20x6, Station 126 Holdings received a $120,000 prepayment from a tenant for 20x7 rent of a building. Station 126 Holdings recorded the receipt as rent revenue. 3. At the end of 20x6, Marwani-Strickland Corporation failed to accrue interest of $10,000 on a note receivable. At the beginning of 20x7, when the company received the cash, it was recorded as interest revenue. Required - For each error: (a) What would the effect of each error be on the income statement and the balance sheet in the 20x6 financial statements? Set up your solution as a table: Income Statement Balance Sheet Item 1 Which line item is Which line item is understated or overstated understated or overstated Net Income is understated Retained Earnings is or overstated? understated or overstated? (b) Prepare any journal entries each company should record in 20x7 to correct the errors. Assume a tax rate of 25%