During 2014, Paul Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts: Paul uses the periodic inventory system. Prior to any adjustments for these errors and ignoring income taxes, Paul's 2013 Net income would be: Select one: a. Correct b. $15,000 overstated c. $75,000 overstated d. $135,000 overstated e. $15,000 understated Knight Company purchased a new machine on May 1, 2014 for $86,000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $2,000. The company has recorded monthly depreciation using the straight-line method. On March 1, 2023, the machine was sold for $9,000. What should be the loss recognized from the sale of the machine? Select one: a. No loss; a gain is realized. b. $7,800 c. $2,800 d. $1,033 e. $5,700