Problem 10 You have been engaged to prepare the corrected financial statement figures for HASSAN INC. The records are in agreement with the following balance sheet: Hassan Inc. Balance Sheet December 31, 2004 ASSETS Cash Accounts receivable Notes receivable Inventory Total 192,500 192,500 227,500 437,500 1,050,000 LIABILITIES AND CAPITAL Accounts payable 175,000 Notes payable 52,500 Common stock 350,000 Retained earnings 472,500 Total 1,050,000 A review of the records of the corporation indicates that the errors and omissions listed in the table below had not been corrected during the applicable years. 2001 2002 2003 2004 Overstatement of inventory 122,500 140,000 Understatement of inventory 105,000 157,500 Prepaid expense 15,750 12,250 8,750 10,500 Unearned revenue 7,000 5,250 Accrued expenses 3,500 1,310 1,750 875 Net income as reported 131,250 113,750 96,250 No dividends were declared during the years and no adjustments were made to retained earnings. REQUIREMENTS: Working paper to compute for the corrected income for the years 2002, 2003 and 2004. Prepare a corrected balance sheet for December 31, 2004