Paragraph Styles Editing 6) Orange Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors: Dec. 31, 2020 Dec. 31, 2021 Ending inventory $198,000 overstated $219,000 understated Depreciation expense126,000 overstated In addition, on December 31, 2021 fully depreciated equipment was sold for $44,000, but the sale was not recorded until 2022. No corrections have been made for any of the errors. Ignore income tax considerations. The total effect of the errors on the balance of Orange's retained earnings at December 31, 2021 is understated by 7) Blue Sky Co. purchased machinery that cost $2,000,000 on January 1, 2018. The entire cost was recorded as an expense. The machinery has a nine-year life and a $100,000 residual value. The error was discovered on December 20, 2021. Ignore income tax considerations. Blue Sky's income statement for the year ended December 31, 2021, should show depreciation expense of