On March 5, 2015, you were hired by Hemingway Inc., a closely held company, as a staff member of its newly created internal auditing department. While reviewing the companys records for 2013 and 2014, you discover that no adjustments have yet been made for the items listed below.

Indicate the effect of any errors on the net income figure reported on the income statement for the year ending December 31, 2013, and the retained earnings figure reported on the balance sheet at December 31, 2014. Assume all amounts are material, and ignore income tax effects. Using the following format, enter the appropriate dollar amounts in the appropriate columns. Consider each item independent of the other items. It is not necessary to total the columns on the grid.

Items 2. 3. Interest income of $13,620 was not accrued at the end of 2013. It was recorded when received in February 2014 A computer costing $3,920 was expensed when purchased on July 1, 2013. It is expected to have a 4-year life with no salvage value. The company typically uses straight- line depreciation for all fixed assets. Research and development costs of $35,700 were incurred early in 2013. They were capitalized and were to be amortized over a 3-year period. Amortization of $11,900 was recorded for 2013 and $11,900 for 2014 On January 2, 2013, Hemingway leased a building for 5 years at a monthly rental of $6,200. On that date, the company paid the following amounts, which were expensed when paid