Wilkins Food Products, Inc., acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2011. In payment for the machine Wilkins issued a three year installment note to be paid in three equal payments at the end of each year. The payments include interest at the rate of 10%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2013. The error had caused Wilkins to understate interest expense by $51,000 in 2011 and $46,000 in 2012. Required: 1. Determine which accounts are incorrect as a result of these errors at January 1, 2013, before any adjustments. (You may select more than one answer. mark the box with a 'X' for correct answers and click to empty the box for the wrong answers.)

2011 net income overstated.

Notes payable understated.

2009 net income understated.

2010 net income understated.

Notes payable overstated 2012

net income overstated.

2. Prepare a journal entry to correct the error.