Exercise $11-26($Algo$)$ Error correction $[$L$011-2,11-7]$

In $2024,$ internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $$363,000$ cost of equipment purchased on January $1,2021.$ The equipment's life was expected to be five years with no residual value. Straight$-$line depreciation is used by PKE.

Required:

Determine the cumulative effect of the error on net income over the three$-$year period from $2021$ through $2023,$ and on retained earnings by the end of $2023.$

Prepare the correcting entry, assuming the error was discovered in $2024$ before the adjusting and closing entries. $($Ignore income taxes.$)$

Assume instead that the equipment was disposed of in $2025$ and the original error was discovered in $2026$ after the $2025$ financial statements were issued. Prepare the correcting entry in $2026.$

Complete this question by entering your answers in the tabs below.

Required $1$

Determine the cumulative effect of the error on net income over the three$-$year period from $2021$ through $2023,$ and on retained earnings by the end of $2023.$

$\backslash$table$[[$Net income over the period $2021$ through $2023$ is$],[$Retained earnings by the end of $2023$ is$]]$