KEW Enterprises began operations in January 2012 to manufacture a hand sanitizer that promised to be more effective and gentler on the skin than existing products. Family members, one of whom was delegated to be the office manager and bookkeeper, staffed the company. Although conscientious, the office manager lacked formal accounting training, which became apparent when the growing company was forced in March 2015 to hire a CPA as controller. Although ostensibly brought in to relieve some of the office manager€™s stress, management made it clear to the new controller that they had some concerns about the quality of information they were receiving. Accordingly, the controller made it a priority to review the records of prior years, looking for ways to improve the accounting system. From this review, the following errors were uncovered.
1. The office manager expensed rent on equipment and facilities when paid. Amounts paid in 2012, 2013, and 2014 that represent prepaid rent are $5,000, $4,500, and $4,900, respectively.
2. No adjusting entries were ever made to reflect accrued salaries. The amounts $12,000, $13,500, and $8,300 should have been accrued in each of the three prior years, respectively.
3. Errors occurred in the depreciation calculations that resulted in depreciation expense being overstated by $3,500 in 2012, understated by $7,000 in 2013, and understated by $6,000 in 2014.
4. In February 2015 some surplus production equipment that originally had cost $14,000 was sold for $4,000; $12,000 in depreciation had correctly been taken on this equipment. The office manager made this entry to record the sale:
To record sale of surplus equipment

5. Supplies expenses in the amount of $2,400 were incorrectly classified as administrative expenses in 2014.

Required:
Complete the worksheet shown below to assist in preparing the correcting entry. (By way of example, the first required entry on the worksheet has beenmade.)

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Error Corrections Worksheet Effect on Income Accounts to be Adjusted Description 2012 2013 2014 2015 Dr Cr Reported income Item 1: Prepaid rent-2012 Prepaid rent 2013 Prepaid rent-2014 Item 2: Accrued wages-2012 Accrued wages-2013 Accrued wages 2014 Item 3: Depreciation Item 4: Gain on machinery Item 5: Classification Adjusted income $(24,000 $43,000 $40,000 N/A 5,000 (5,000) Counterbalancing error