Sullivan Corporation discovered in 2025 that it had incorrectly recorded in 2024 a cash payment of $60,000 for utilities expense. The correct amount of the utilities expense was $75,000. Requirements 1. Determine the effect of the error on the accounting equation in 2024. 2. How should this error be reported in the 2025 financial statements? Requirement 1. Determine the effect of the error on the accounting equation in 2024 In 2024, the error overstated utilities expense and understated net income by 15,000 in 2024, total stockholders' equity would be understated 15,000 Requirement 2. How should this error be reported in the 2025 financial statements? The error would be designated as a prior-period adjustment to the beginning balance in the retained eamings account on the as an reduction of Retained Eamings Statement 15,000 2025