Section Three (2 points)

The Mace Company fails to record these Journal Entries:

Accrued Expense $40

Cash paid to purchase Prepaid Insurance $30

Required:

Determine the net effect of these errors on the following items. Indicate the dollar amount of the error and the direction of the error. (Example: $17 overstated, or $12 understated, or NO ERROR)

a) Net Income $_______________

b) Total Liabilities $_______________

c) Total Assets $_______________

d) Retained Earnings $_______________