In reviewing the accounts in 2009 after the books for the prior year have been closed, you find that the following errors have been made:

In 2007 the ending inventory was understated by $126,000.

In 2007 the company failed to accrue rent expense of $19,500.

In 2008 the company failed to accrue insurance expense of $6,000.

REQUIRED: Ignoring taxes, determine what amount, if any, net income and retained earning would be over or under stated in 2007 and 2008 as a result of these errors. Show your calculations and clearly label your answers.