For three years the Sandy Caven Company failed to recognize accruals,

prepayments, and other transactions in its accounts. Reported net income and a

listing of the errors appear below.

$20$X$320$X$220$X$1$

$1.$ Reported net income $($loss$).........................................$$ $(1,000)$ $ $4,000$ $ $12,000$

$2.$ Failed to record accrued revenues $............................4,8002,5002,000$

$3.$ Failed to record uncollectible accounts expense $.......200800600$

$4.$ Failed to record accrued salaries $...............................$ nil $1,8001,300$

$5.$ Understated depreciation expense $............................1,5001,5001,200$

$6.$ Goodwill purchased and expensed

$($Should be Reviewed for Impairment$).......................1,000$ nil $5,000$

$7.$ Overstated ending inventories $...................................$ nil $2,8003,600$

$8.$ Failed to record purchase on account;

merchandise properly included

in ending inventory $.....................................................4,000$ nil nil

$9.$ Failed to recognize unused supplies as an asset

$($expensed them instead$)...........................................400$ nil $300$

$10.$ Failed to recognize gain on sale of land;

land credited for amount of proceeds $........................$ nil nil $600$

$11.$ Failed to recognize unearned

revenue at end of year $..............................................900500$ nil

Note: Goodwill was Impaired by $10\mathrm{.}0\%$ Each Year!

Required:

$1.$ Recalculate the correct$/$adjusted net income for each year.

$2.$ Prepare the compound entry, if necessary, to correct the books at the end of

$20$X$3,$ assuming that the books have not been closed. Ignore taxes.

$3.$ Prepare the compound entry, if necessary, to correct the books at the end of

$20$X$3,$ assuming that the books have been closed. Ignore taxes