Blunder Corp. began operations on January 1, 2019. Financial statements for 2019 and 2020 contained the following errors:

Dec. 31, 2019 Dec. 31, 2020

Ending inventory $ 20,000 too high $ 35,000 too high

Depreciation expense 16,000 too low

Accumulated depreciation 16,000 too low 16,000 too low

Insurance expense 14,000 too high 10,000 too low

Prepaid insurance 14,000 too low 4,000 too low

In addition, on December 26, 2020, fully depreciated equipment was sold for $ 19,000, but the sale was not recorded until 2021. No corrections have been made for any of the errors.

Instructions

Ignoring income tax, show your calculation of the total effect of the errors on 2020 net income. Show each correction for possible part marks