Question 1: At the end of Year 3, Castle Consulting did NOT make the adjusting entries indicated below. Indicate the effect of the error on Year 3 Net Income, Assets, Liabilities, and Owners Equity (on December 31, Year 3). Please specify the dollar effect of the error. Use O for overstate, U for understate, and NE for no effect. Assume each error is independent of the others. Error Net Income Assets Liabilities Owners Equity 1. Entry to record interest expense on a short term Note Payable. The note as a balance of 90,000. The annual interest rate of 8%, dated May 1. The interest is payable with the principal at maturity. 2. On July 1st, Year 2 the company bought a machine for 160,000 and debited the entire amount to expense. The machine has a useful life of 10 years and no salvage value. The company would normally have used the straight line depreciation method. The company did not correct the error in both Year 2 and Year 3. 3. Entry to record the expired portion of a threeyear life insurance policy paid for on August 1, Year 3 for 72,000 and charged to a permanent account. 4. Entry to record accrued salaries and wages earned by employees at fiscal yearend in the amount of 7,500.