Wilkins Food Products Inc. acquired a packaging machine from Lawrence Specialists Corporation. Lawrence completed construction of the machine on January 1, 2016. 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 11%. Lawrence made a conceptual error in preparing the amortization schedule, which Wilkins failed to discover until 2018. As a result of the error, Wilkins understated interest expense by $58,000 in 2016 and $53,000 in 2017. Required: 1. Indicate in the table below which accounts are incorrect as a result of these errors at January 1, 2018 and whether those accounts are understated or overstated. (Ignore income taxes.) 2. Prepare a journal entry to correct the error.

Account	2016	2017