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On March 5. 2026. you were hired by Headland Inc, a closely held company, as a statf member of its newly created internal auditing department.

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On March 5. 2026. you were hired by Headland Inc, a closely held company, as a statf member of its newly created internal auditing department. While reviewing the company's records for 2024 and 2025 , you discover that no adjustments have yet been made for the following items. Items 1. Interest income of $15,000 was not accrued at the end of 2024 . It was recorded when recelved in February 2025. 2. A computer costing $3,920 was expensed when purchased on July 1,2024 . It is expected to have a 4-year life with no salvage value. The company typically uses straight-line depreciation for all fixed assets 3. Research and development costs of $34,200 were incurred early in 2024 . They were capitalized and were to be amortized over a 3-yer period. Amortization of $11,400 was recorded for 2024 and $11,400 for 2025 . 4. On Jamuary 2.2024. Headland leased a building for 5 years at a monthly rental of $7.500 On that date, the company paid the following amounts, which were expensed when paid 5. The compary received $37.800 from a customer at the beginning of 2024 for services that it is to perform evenly ower a 3 - 5. The company received $37,800 from a customer at the beginning of 2024 for services that it is to perform evenly over a 3 . year period beginning in 2024. None of the amount received was reported as unearned revenue at the end of 2024. 6. Merchandise inventory costing $17,600 was in the warehouse at December 31,2024 , but was incorrectly omitted from the physical count at that date. The company uses the periodic imventory method. Indicate the effect of any errors on the net income figure reported on the income statement for the year ending December 31,2024 . and the retained earnings figure reported on the balance sheet at December 31, 2025. 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

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