Q1. Lowell Corporation has used the accrual basis of accounting for several years. A review of the records, however, indicates that some expenses and revenues have been handled on a cash basis because of errors made by an inexperienced bookkeeper. Income statements prepared by the bookkeeper reported $29,000 net income for 2019 and $37,000 net income for 2020. Further examination of the records reveals that the following items were handled improperly. The books are open for 2020. 1. Rent was received from a tenant in December 2019. The amount, $1,000, was recorded as revenue at that time even though the rental pertained to 2020. 2. 3. Certain wages payable on December 31 have been consistently omitted from the records of that date and have been entered as expenses when paid in the following year. The amounts of the accruals recorded in this manner were: 31-Dec-18 31-Dec-19 31-Dec-20 1,100 1,200 940 Invoices for certain supplies purchased have been charged to expense accounts when received. Inventories of those supplies on hand at the end of each year have been ignored, and no entry has been made for them. 31-Dec-18 31-Dec-19 1,300 940 1,420 31-Dec-20 Below is a schedule showing the derivation of corrected net income for the years 2019 and 2020. 2019 2020 Net income, with errors $29,000 $37,000 Rent received in 2019, earned in 2020 (1000) 1000 Wages not accrued, 12/31/18 1100 Wages not accrued, 12/31/19 (1200) 1200 Wages not accrued, 12/31/20 (940) Supplies cost not deferred, 12/31/18 (1300) Supplies cost not deferred, 12/31/19 940 (940) Supplies cost not deferred, 12/31/20 1420 Corrected net income $27,540 $38,740