Question 12 of 23 < View Policies Current Attempt in Progress On March 5, 2026, you were hired by Windsor Inc., a closely held company, as a staff 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 2 3. Interest income of $14,800 was not accrued at the end of 2024, It was recorded when received in February 2025. A computer costing $3,760 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. Research and development costs of $30,000 were incurred early in 2024. They were capitalized and were to be amortized over a 3-year period. Amortization of $10,000 was recorded for 2024 and $10,000 for 2025. 4. On January 2, 2024, Windsor leased a building for 5 years at a monthly rental of $7,200. On that date, the company paid the following amounts, which were expensed when paid. Security deposit $19,700 First month's rent 7,200 Last month's rent 7,200 $34,100 5. 6. The company received $34,500 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 Merchandise inventory costing $17.700 was in the warehouse at December 31, 2024, but was incorrectly omitted from the 6. year period beginning in 2024. None of the amount received was reported as unearned revenue at the end of 2024. Merchandise inventory costing $17,700 was in the warehouse at December 31, 2024, but was incorrectly omitted from the physical count at that date. The company uses the periodic inventory 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. Net Income for 2024 Item Understated Overstated 1. $ $ 2 $ $ 3. $ $ 4 $ $ 5. $ 6. $ Retained Earnings at 12/31/25 Understated Overstated $ $ $ $ $ $