Dudley Company failed to recognize the following accruals. It also recorded the prepaid expenses and unearned revenues as expenses and revenues, respectively, in the following year when paid or collected.

The reported pretax income was $20,000 in 2018, $25,000 in 2019, and $23,000 in 2020.

Required:
1. Compute the correct pretax income for 2018, 2019, and 2020.
2. Prepare the journal entries necessary in 2020 if the errors are discovered at the end of that year. Ignore income taxes.
3. Prepare the journal entries necessary in 2021 if the errors are discovered at the end of that year. Ignore income taxes.

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2019 2018 2020 Prepaid expenses Accrued expenses $ 900 $500 $1,100 800 700 950 Revenue received in advance 300 400 1,300 1,200 Revenue earned but not received 1,000 600