Company A acquired a machine from Company B. Company B completed construction of the machine on January 1, Year 1. In payment for the machine Company A issued a three-year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 10%. Company B made a conceptual error in preparing the amortization schedule, which Company A failed to discover until Year 3. The error had caused Company B to understate interest expense by $51,000 in Year 1 and $46,000 in Year 2. Required: 1. Determine which accounts are incorrect as a result of these errors at January 1, Year 3, before any adjustments. (Ignore income taxes.) 2. Prepare a journal entry to correct the error. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine which accounts are incorrect as a result of these errors at January 1, Year 3, before any adjustments. (Ignore income taxes.) Note: Select all that apply. 00000000 Note payable understated. Retained earnings understated. Year 1 Interest expense overstated. Year 1 Interest expense understated. Retained earnings overstated. Note payable overstated. Year 2 Interest expense overstated. Year 2 Interest expense understated. < Required 1 Required 2 >