Error: Analysis and Correction On July 1 of Year 8, a full year's insurance premium of $2,400, covering the period July 1 of Year 8 to June 30 of Year 9, was paid and debited to insurance expense. Assume the following: The company has a calendar fiscal year. January 1 of Year 8, retained earnings balance is $20,000. Year 8 reported net income (assuming the error is not discovered) is $22,800. Year 9 net income (assuming the error is not discovered) is $30,000. Year 10 net income is $40,000. Ignore taxes. Required a. List the effects of the error on affected accounts and on net income in Year 8 and Year 9. Assume no adjusting entry is made on December 31 of Year 8. Note: Indicate an understatement by using a negative sign (-) with the amount. Indicate no change by entering a zero (0). Accounts are over (under) stated as follows: Year 8 Year 9 $ $ Insurance expense Ending prepaid insurance Net income Ending retained earnings b. Prepare the entry to record the error if discovered in Year 8. Note: If a journal entry isn't required on any of the dates shown, select "N/Adebit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). Ref. b. To correct error. Account Dr. Cr.