Tack, Inc., reported a Retained earnings balance of $150,000 at December 31, 20X0. In June 20X1, Tack’s internal audit staff discovered two errors that were made in preparing the 20X0 financial statements that are considered material:

a. Merchandise costing $40,000 was mistakenly omitted from the 20X0 ending inventory. 

b. Equipment purchased on July 1, 20X0, for $70,000 was mistakenly charged to a repairs expense account. The equipment should have been capitalized and depreciated using straight-line depreciation, a 10-year useful life, and $10,000 salvage value. 

Required:

1. Prepare the journal entry Tack would make in 20X1 to correct the errors made in 20X0. Assume depreciation for 20X1 is made as a year-end adjusting entry. (Ignore taxes.)

2. Describe the content of the comparative periods in Tack’s 20X1 financial statements. That is, how is the correction reflected in the 20X1 financial report?