Bryant Corporation was incorporated on December 1, 2006 and began operations one week later. Before closing the books for the fiscal year ended November 30, 2007, Bryant's controller prepared the following financial statements:

Bryant Corporation is in the process of negotiating a loan for expansion purposes, and the bank has requested audited financial statements. During the course of the audit, the following additional information was obtained:
1. Included in selling and administrative expenses were $5,000 of costs incurred on software being developed for sale to others. The technological feasibility of the software has been established.
2. Based on an aging of the accounts receivable as of November 30, 2007, it was estimated that $36,000 of the receivables will be uncollectible.
3. Inventories at November 30, 2007 did not include work-in-process inventory costing $12,000 sent to an outside processor on November 26, 2007.
4. A $3,000 insurance premium paid on November 30, 2007 on a policy expiring one year later was charged to insurance expense.
5. Bryant adopted a pension plan on June 1, 2007 for eligible employees to be administered by a trustee. Based upon actuarial computations, the first 12 month's accrued pension plan expense was estimated at $45,000.
6. On June 1, 2007 a production machine purchased for $24,000 was charged to repairs and maintenance. Bryant depreciates machines of this type on the straight-line method over a five-year life, with no salvage value, for financial and tax purposes.
7. Research and development costs of $150,000 were incurred in the development of a patent that Bryant expects to be granted during the fiscal year ending November 30, 2008. Bryant initiated a five-year amortization of the $150,000 total cost during the fiscal year ended November 30, 2007.
8. During December 2007 a competitor company filed suit against Bryant for patent infringement claiming $200,000 in damages. Bryant's legal counsel believes that an unfavorable outcome is probable. A reasonable accrual based on an estimate of the court's award to the plaintiff is $50,000.
9. The 30% effective tax rate was determined to be appropriate for calculating the provision for income taxes for the fiscal year ended November 30, 2007. Ignore computation of deferred portion of income taxes.

Required
1. Prepare the necessary correcting entries.
2. Prepare a corrected balance sheet of Bryant Corporation as of November 30, 2007 and a corrected statement of income for the year ended November 30,2007.

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Balance Sheet November 30, 2007 Liabilities and Stockholders' Equity Current liabilities Current assets Cash Accounts receivable Less: Allowance for doubtful accounts Inventories Prepaid insurance 180,000Accounts payable and accrued expenses 480,000 Ic taxes payable 592,000 168,000 760,000 (59,000) 430,000 Stockholders' equity Total current liabilities Common stock, $10 par value Retained earnings $ 400,000 392,000 5 792,000 $1,552,000 Total current assets $1,046,000 426,000 Property, plant, and equipment Less: Accumulated depreciation Research and development costs Total Assets Total stockholders equity (40,000) Total Liabilities and Stockholders Equity 120,000 1,552,000 Statement of Income For Year Ended November 30, 2007 Net sales Operating expenses $2,950,000 Cost of sales Selling and administrative Depreciation Research and development $1,670,000 650,000 40,000 30,000 $2,390,000 $560,000 168,000 392,000 Total expenses Income before income taxes Income tax expense Net Income