The before-tax income for Environmentalists Corp. for 2021 was $295,000; for 2020, it was $320.000. You have spent considerable time reviewing the accounts and have noted the following:

1. Sales for 2020 included $72,000 that had been received in cash during 2020, but for which the related products were delivered in 2021. Performance was considered complete on delivery.

1. Ending inventory on December 31, 2021, was understated by $6,500. The December 31, 2020 ending inventory was overstated by $3,300.

In January 2021, Environmentalists reviewed its recycling machinery. The machine was purchased in January 2018 for $250,000 with a residual value of $30,000 and a useful life of 10 years. Environmentalists has determined the remaining useful life is now 5 years with no residual value.

1. Ordinary repairs to equipment had been charged in error to the Equipment account during 2021,2020 and 2019. In total, repairs in the amount of $7,500 in 2021, $8,400 in 2020 and $9,000 in 2019 were charged in this way. The company uses the declining balance method and applies a rate of 10% in determining its depreciation charges.

Assume that Environmentalists Corp. applies ASPE.

Required:

i. A schedule showing the calculation of corrected income before tax for 2021 and 2020.

ii. The journal entries that the company's accountant would prepare in 2021, assuming the errors are discovered while the 2020 books are still open. Ignore income tax effects.

iii. The Statement of Retained Earnings for December 31, 2021,The company reported Retained Earnings of $300,000 at the end of 2019.